Hesperia City Council
November 18, 2025

FISCAL YEAR 2025-26

FIRST QUARTER BUDGET REVIEW

November 18, 2025

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2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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T A B L E O F C O N T E N T S

Page
Executive Summary……………………………………………………………………………………………. 4 Status of FY 2025-26 Budget, Budget Amendments, and Reserves:

General Fund…………………………………………………………………………………………. 6
Water District…………………………………………………………………………………………. 7
Sewer Operating..……………………………………………………………………………………. 8
Streets Maintenance…………………………………………………………………………………. 9
FY 2025-26 September 30, 2025 Year-To-Date Revenue Review:

Major Funds Revenue Summary…………………………………………………………………… 10 General Fund Revenues…………………………………………………………………………….. 11 Community Development Block Grant Revenue…………………………………………………. 12 Community Development Commission Revenue………………………………………………… 12 Hesperia Housing Authority Revenue……………………………………………………………… 13 Street Related Funds Revenue…………………………………………………………………….. 13 Other City Funds Revenue………………………………………………………………………….. 15 Water District Revenue……………………………………………………………………………… 17 Department FY 2025-26 Budget Expenditure Status Summary……………………………………..…….. 19 FY 2025-26 Total Expenditures By Department and Program……………………………………….……. 19 Proposed Budget Amendments – Summary………………………………………………………………… 28 Proposed Budget Amendments – Narrative ………………………………………………………………… 28 Fiscal Year 2026-27 Outlook……………………………………………………………………….…….……. 31

2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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EXECUTIVE SUMMARY

The following chart compares the FY 2025-26 Budget and September 2025 year-to-date (YTD) revenue and expenditure totals. The percentage comparisons for revenues and expenditures are based on comparing the September 202 5 YTD to the FY 202 5-26 Amended Budget. The Amended Budget is used to accurately reflect any changes to the adopted budget that occur from the City Council approving budget amendments during the first three months of the fiscal year.

Status of Overall City Fiscal Year 2025-26 Budget
• Revenue: Based on the analysis of first quarter performance to date, total General Fund revenue collected is $19.8 million, or 14% of the budgeted revenue. This aligns with the historical first -quarter average of 13% to 15%, and notably, the first quarter of FY 2024-25 also reflected a 14% collection rate. While one might expect collections to be closer to 25% at this point in the fiscal year, there is a timing delay in receiving several tax-based revenues, including Sales Tax, Measure I, Franchise Tax, and Vehicle Lic ense Fees. Additional detail on these revenue sources is provided later in this report.
• Expenditures: As of September 2025, year-to-date expenditures total $27,266,909 or 20% expended. The General Fund is slightly above 25% due to the lump-sum payment of the CalPERS unfunded liability, which totaled $3.0 million for the General Fund portion, and the City’s liability insurance payment of $3.2 million. Street-related funds, on the other hand, are below the 25% threshold , as these funds are primarily tied to Capital Improvement Program (CIP) projects, which typically experience the most activity during the latter part of the fiscal year. • Reserves: The cash reserve levels for the General Fund, Water Operating Fund, and Sewer Operating Fund all exceed the City Council’s minimum policy requirement of maintaining at least two months of annual expenditures in cash, even after factoring in the proposed bu dget amendments. The following estimated reserve calculations are based on the cash balances as of June 30, 2024, as reported in the audited Annual Comprehensive Financial Report (ACFR) for that year. Using the audited ACFR data ensures that the reserve estimates are based on verified financial information. The ending cash balances will be updated in the Mid -Year Report once the June 30, 2025 , ACFR is finalized.

2025-26 September Percent
Amended Budget 2025 YTD Expended
Revenue
General Fund 54,973,516$ 5,771,835$ 10%
Streets Related Funds 32,784,043 2,853,508 9% Water District Funds 40,567,539 10,776,775 9% All Other Funds 14,254,172 425,932 3% Total Revenue 142,579,270$ 19,828,050$ 14%
Expenditures
General Fund 51,550,188$ 14,595,348$ 28%
Streets Related Funds 36,458,381 1,272,208 3% Water District Funds 43,778,073 9,461,351 22% All Other Funds 7,548,056 1,938,002 26% Total Expenditures 139,334,698$ 27,266,909$ 20%
10% Cash Reserves (Council/Board Policy) 5,656,647$ 10% 3,505,455$ 10% 990,948$ 10% Cash Reserves Above 10% Reserve 19,313,468 35% 4,892,786 14% 4,495,354 45% Total Estimated Cash Reserves 24,970,115$ 45% 8,398,241$ 24% 5,486,302$ 55% Months of Cash 5.5 2.9 6.6
Water OperatingGeneral Fund Sewer Operating
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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EXECUTIVE SUMMARY (Continued)

Proposed Budget Amendments – Seven (7) Budget Amendments are proposed for $5,971,263 The FY 202 5-26 First Quarter Budget Review includes seven (7) items as proposed budget amendments totaling $5,971,263. A complete discussion of the budget amendments is included on page 28. The proposed budget amendments are included in the fund balance analyses where appropriate:

FY 2025-26 1st Quarter Budget Requests General Fund Other Funds Totals

1. SB 1383 CalRecycle (City Manager) 0$ 114,766$ 114,766$

2. DocAccess ADA Compliance (IT) 20,160 0 20,160

3. Network Firewalls/Licensing Support (IT) 144,376 0 144,376

4. Interview Room Recording System (Police) 52,351 0 52,351

5. Increase to Monthly Law Enforcement Costs (Police) 1,384,549 0 1,384,549

6. ARPA Projects (Water/Sewer) 0 4,142,021 4,142,021

7. Water, Sewer, Recycled Water Rate Study (Water/Sewer) 0 113,040 113,040 Total 1st Quarter Budget Amendments Requests 1,601,436$ 4,369,827$ 5,971,263$ 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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STATUS OF CITY GENERAL FUND 2025-26 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2025-26 2025-26
Budget Revised Dollars Percent

RESOURCES
General Fund Operating Revenue 54,119,714$ 54,119,714$ 0$ 0% ARPA Loss Revenue 308,402 308,402
Transfers In
Fund 255 - AB 3229 COPS Grant 200,000 200,000 Total Transfers In 200,000 200,000
Budgeted Reserves 350,000 350,000
First Quarter Budget Amendment Reserves 0 1,588,352 Total Budgeted Reserves 350,000$ 1,938,352$
Total General Fund Resources 54,978,116$ 56,566,468$ 1,588,352$ 3%

EXPENDITURES
Total General Fund Operating Expenses 51,550,188$ 51,550,188$ Transfers Out

1. Fund 210 - HFPD CalPERS 1,959,733 1,959,733

2. Fund 241 - CFD 2021-1 Residential Maint. & Service 2,610 2,610

3. Fund 242 - CFD 2022-1 Non-Residential Maint. & Service 2,610 2,610

4. Fund 243 - CFD 2023-1 Silverwood Maintenance 3,360 3,360 1,446,531 1,446,531
Total Transfers Out 3,414,844 3,414,844
Total General Fund Expenditures & Transfers Out 54,965,032$ 54,965,032$ 0$ 0% First Quarter Budget Amendments Requested

1. DocAccess ADA Compliance 0$ 20,160$

2. Network Firewalls/Licensing Support 0 144,376

3. Interview Room Recording System 0 52,351

4. Schedule A Increase - Law Enforcement 0 1,384,549 Total First Quarter Budget Amendments 0 1,601,436 Total Expenditures and Amendments 54,965,032$ 56,566,468$ 1,601,436$ 3% DIFFERENCE TOTAL RESOURCES/TOTAL EXPENDITURES 13,084$ 0$ (13,084)$ -100% Fund Balance
July 1 Beginning Balance 48,597,516$ 48,597,516$
Total Budgeted Reserves (350,000) (1,938,352) Difference Total Resources/Total Expenditures 13,084 0 Estimated June 30 Ending Fund Balance 48,260,600$ 46,659,164$ (1,601,436)$ -3% Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 28,509,903$ 28,509,903$
Estimated Resources Less Budgeted Reserves 54,628,116 53,026,680 Estimated Expenditures (54,965,032) (56,566,468)
28,172,987$ 24,970,115$
Months of Cash to Pay Expenditures and Transfers Out 6.2 5.5 Estimated Cash Reserves Percentage 51% 45%
Estimated Ending Cash June 30,
Change

5. Fund 402 - 2012 Water Rights Acquisition Debt Service 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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STATUS OF WATER OPERATING 2025-26 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2025-26 2025-26
Resources Budget Budget Dollars Percent
Revenue
Water Operations Revenue 29,182,786$ 29,182,786$
ARPA 1,833,374 1,833,374
ARPA Carryover Into First Quarter 0 3,760,771 Total Water Operations Revenue 31,016,160$ 34,776,931$ 3,760,771$ 12% Reserves
FY 2025-26 Budget 350,000 350,000
First Quarter Budget Amendment Reserves 0 113,040 Total Budgeted Reserves 350,000 463,040
Total Water Operations & Reserves Resources 31,366,160$ 35,239,971$ 3,873,811$ 12% Expenditures by Program
700 4010 Source of Supply 5,068,641$ 5,068,641$
700 4020 Production 5,778,128 5,778,128
700 4030 Water Distribution 1,757,302 1,788,302 700 4035 Water Line Replacement 1,302,323 1,302,323 700 4040 Engineering 1,860,489 1,858,289
700 4050 Customer Service 2,457,742 2,432,742
700 4060 Utility Billing 1,521,567 1,521,567
700 4070 Administration 8,831,812 8,831,812
700 4080 Property Management 510,056 506,256 700 4160 Streets Repair 1,237,564 1,237,564
Capital Maintenance 855,114 855,114
Total Water Operations Expenditures 31,180,738$ 31,180,738$ First Quarter Budget Amendments Requested

1. ARPA Project Carryover 0$ 3,760,771$

2. Water, Sewer, Recycled Water Rate Study (Water/Sewer) 0 113,040 Total First Quarter Budget Amendments 0 3,873,811 Total Expenditures and Amendments 31,180,738$ 35,054,549$ 3,873,811$ 12% Difference Total Resources / Total Expenditures 185,422$ 185,422$ Fund Balance
July 1 Beginning Balance 85,604,770$ 85,604,770$
Budgeted Reserves (350,000) (463,040)
Difference Resources/Expenditures 185,422 185,422 Estimated June 30 Ending Fund Balance 85,440,192$ 85,327,152$ (113,040)$ 0% Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 8,675,859$ 8,675,859$
Estimated Resources Less Budgeted Reserves 31,016,160 34,776,931 Estimated Expenditures (31,180,738) (35,054,549) Estimated Ending Cash June 30, 8,511,281$ 8,398,241$ (113,040)$ -1% Months of Cash to Pay Expenditures and Reserve Balances 3.3 2.9 Total Estimated Cash Reserves Percentage 27% 24%
Change
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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STATUS OF SEWER OPERATING 2025-26 BUDGET, BUDGET AMENDMENTS, AND RESERVES

2025-26 2025-26
Resources Budget Budget Dollars Percent
Revenue
Sewer Operations Revenue 6,729,977$ 6,729,977$
ARPA 114,953 114,953
ARPA Carryover Into First Quarter 0 381,250 Total Sewer Operations Revenue 6,844,930$ 7,226,180$ 381,250$ 6% Reserves
FY 2025-26 Budget 2,683,300 2,683,300
First Quarter Budget Amendment Reserves 0 0 Total Budgeted Reserves 2,683,300 2,683,300
Total Sewer Operations & Reserves Resources 9,528,230$ 9,909,480$ 381,250$ 4% Expenditures and Transfers
710 4200 Sewer Distribution 6,564,502$ 6,564,502$
710 4240 Sewer Engineering 277,360 277,360
710 4260 Sewer Utility Billing 312,753 312,753 710 4270 Sewer Administration 1,763,615 1,763,615 Fund 711 - Sewer Capital Fund 610,000 610,000 Total Sewer Operations Expenditures 9,528,230$ 9,528,230$ 0$ 0% First Quarter Budget Amendments Requested

1. ARPA Project Carryover 0$ 381,250$ Total First Quarter Budget Amendments 0 381,250 Total Expenditures and Amendments 9,528,230$ 9,909,480$ 381,250$ 4% Difference Total Resources / Total Expenditures 0$ 0$ Fund Balance
July 1 Beginning Balance 14,587,755$ 14,587,755$
Budgeted Reserves (2,683,300) (2,683,300)
Difference Resources/Expenditures 0 0 Estimated June 30 Ending Fund Balance 11,904,455$ 11,904,455$ 0$ 0% Months of Cash to Pay Expenditures and Transfers Out
Beginning Cash July 01, 12,528,184$ 12,528,184$
Estimated Resources Less Budgeted Reserves 6,844,930 7,226,180 Estimated Expenditures (9,528,230) (9,909,480) VVWRA Cash Retention - Zone V (3,400,000) (4,358,582) Estimated Ending Cash June 30, 6,444,884$ 5,486,302$ (958,582)$ -15% Months of Cash to Pay Expenditures and Reserve Balances 8.1 6.6 Total Estimated Cash Reserves Percentage 68% 55%
Change
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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STATUS OF STREET MAINTENANCE FUND 2025-26 BUDGET, FUND BALANCE, AND RESERVES

2025-26 2025-26
RESOURCES Budget Revised Dollars Percent
Street Maintenance Operating Revenue 27,500$ 27,500$ 0$ 0% Transfers In
Fund 100 - General Fund 0$ 0$
Fund 204 - Measure I - Renewal 1,750,000 1,750,000
Fund 205 - Gas Tax Fund 1,400,000 1,400,000
Fund 206 - Gas Tax Swap 669,000 669,000
Fund 207 - Local Transportation Fund 226,883 226,883 Fund 207 - LTF (Vision Zero Study) 394,000 394,000 Total Transfers In 4,439,883 4,439,883
Total Revenues 4,467,383 4,467,383
Budgeted Reserves 104,420 104,420
Total Street Maintenance Resources 4,571,803$ 4,571,803$ EXPENDITURES 4,382,518$ 4,382,518$ 0$ 0% DIFFERENCE RESOURCES/EXPENDITURES 189,285$ 189,285$ 0$ 0% Fund Balance
July 1 Beginning Balance 670,162$ 670,162$
Total Budgeted Reserves (104,420) (104,420)
Difference Resources/Expenditures 189,285 189,285 Estimated June 30 Ending Balance 755,027$ 755,027$
Change
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW

Overall – The first-quarter analysis reveals that $19.8 million, or 14% of the total budgeted revenue, has been collected.

The amount of revenue collected thus far falls within the range of reasonable expectations. While individual accounts may have deviations from their forecasted amounts due to unforeseen circumstances, the overall revenue collected through first quarter is progressing as anticipated.

General Fund revenues received through the first quarter of FY 202 5-26 totaled $5,771,835 or 11% of the total annual projected revenues of $54,973,516. The revenue through first quarter is progressing as anticipated. This is due to the delayed nature of certain revenue sources such as Sales Taxes, Property Taxes and Development-related revenue.

The Water District revenues received through the first quarter totaled $ 10.8 million or 27% of the total annual projected revenues of $40.6 million. Water District revenue is trending as anticipated and will continue to be monitored to ensure revenue is collected and recorded adequately and no deviations are encountered.

Staff will continue to monitor the FY 2025-26 revenue and make any necessary recommendations for revisions during the Mid-Year Budget Review in February 2026. The following pages will detail the current revenue collections for each fund.

September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
General Fund 54,973,516$ 5,771,835$ 11% 54,973,516$ 0$ Community Development Block Grant 3,853,437 1,950 0% 3,853,437 0 Community Development Commission 150,000 0 0% 150,000 0 Hesperia Housing Authority 383,201 0 0% 383,201 0 Street Related Funds 32,784,043 2,853,508 9% 32,784,043 0 Other City Related Funds 9,867,534 423,982 4% 9,867,534 0 Water Operating 31,016,160 5,159,146 17% 31,016,160 0 Water Capital 1,396,860 4,149,953 297% 1,396,860 0 Water Reserves 735,589 132,064 18% 735,589 0 Total Water Operating, Capital, & Reserves 33,148,609 9,441,163 29% 33,148,609 0 Sewer Operating 6,844,930 1,159,416 17% 6,844,930 0 Sewer Capital 564,000 176,195 31% 564,000 0 Sewer Reserves 10,000 0 0% 10,000 0 Total Sewer Operating, Capital, & Reserves 7,418,930 1,335,612 18% 7,418,930 0 Water District 40,567,539 10,776,775 27% 40,567,539 0 Total All Funds 142,579,270$ 19,828,050$ 14% 142,579,270$ 0$

MAJOR FUNDS REVENUE SUMMARY
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments:

In total, General Fund is trending as expected for First Quarter. As demonstrated in the discussions to follow, there is a delayed nature in revenue collection for several of the revenue sources . This is anticipated, and a substantial portion of the First Quarter revenue, especially tax -based, typically is received during October and November due to the structure of payments received from the State.

Sales and Use Tax – For the first quarter of FY 2025-26, the City received $908,872 for (1) month (July 2025) of activity.

There is typically a two-month delay from the month the Sales Tax was earned to when the City receives the Sales Tax revenue from the State . Due to this, 7% of the FY 2025 -26 Budget of $13,901,174 being collected through the First Quarter is slightly below expectations; however, with the August installment received in October, the City is modestly exceeding projections by $12,000.

Vehicle License Fee (VLF) – This revenue is based on the City’s assessed valuation of the properties within the City.

As the assessed valuation changes from the prior year, this revenue changes by the same percentage. There is no revenue reported through September 2025, as the first installment of the VLF is expected to be received during January 2026.

Franchise Fees – The City receives franchise fees from several different service providers within the City as a fee for the use of streets and public right -of-way within our municipality. Revenue through September 202 5 YTD total is $73,778, which is 2% of the FY 2025-2026 budget of $4,607,921. This is within expectations as the City has historically received the bulk of this revenue source in the later parts of the Fiscal Year.

Transient Occupancy Tax (TOT) – TOT is a tax of 10% applied to the cost of hotel and other lodging stays of less than 30 days. Through September 2025, the City collected $166,103, which is an increase of $20,549 or 14% more than the September 2024 YTD of $145,554. This increase is primarily due to two hotels, who were delinquent with their payments last year, being timely with their payments in the current year.

Secured Property Tax – The first remittance from the County will be received in November 202 5; therefore, there is no revenue to report through September 2025.

September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
Sales and Use Tax 13,901,174$ 908,872$ 7% 13,901,174$ 0$ Vehicle License Fees 13,829,850 0 0% 13,829,850 0 Franchise Fees 4,607,921 73,778 2% 4,607,921 0 Total Top Three Revenues 32,338,945 982,650 3% 32,338,945 0 General & Administrative Recovery 5,302,870 1,325,718 25% 5,302,870 0 Transient Occupancy Tax 1,517,200 166,103 11% 1,517,200 0 Secured Property Tax 1,308,124 0 0% 1,308,124 0 Business License 1,094,000 282,692 26% 1,094,000 0 Leased Water Rights 1,946,255 0 0% 1,946,255 0 Development Related Revenues
Planning 603,595 198,567 33% 603,595 0 Building & Safety 3,014,164 1,362,988 45% 3,014,164 0 Engineering 1,760,460 419,848 24% 1,760,460 0 Sub-Total Development Related Revenues 5,378,219 1,981,402 37% 5,378,219 0 Sub-Total Top 12 Revenue Sources 48,885,613 4,738,565 10% 48,885,613 0 All Other General Fund Revenues 6,087,903 1,033,270 17% 6,087,903 0 Total General Fund Revenues 54,973,516$ 5,771,835$ 11% 54,973,516$ 0$

GENERAL FUND REVENUES
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

General Fund Revenue Comments (Continued):

Business License – This revenue source consists of the City taxing businesses for operating and conducting business within the City ’s jurisdiction. The FY 202 5-26 First Quarter revenue collections is performing as anticipated with total revenue collection of $282,692 or 26% of the FY 2025-26 Budget of $1,094,000.

Leased Water Rights – The permanent water rights owned by the General Fund can be leased annually and the lease revenue is used to pay for the 2012 Bonds, which financed the purchase of the water rights. No revenue has been received in FY 2025-26 as the leasing of water rights has historically occurred later in the Fiscal Year.

Development Related Revenue – This revenue source accounts primarily for development -related fees such as Planning, Building and Safety, and Engineering. As of September 30, 2025, total revenue collected is $1,981,402 or 37% of the total budgeted revenue of $5,378,219. Through First Quarter, the City has received 21 single -family residential building permits and 38,805 square feet of commercial permits.

All Other General Fund Revenue – Other General Fund Revenue accounts are $1,033,270 or 17% collected through September 30, 2025 of the budget of $6,087,903 for FY 2025 -26. While Other General Revenue appears to be slightly below expectations, this is primarily due to the recognition of interest earnings, which is recorded after the close of the First Quarter.

Community Development Block Grant Revenue Comments:

These revenues are grant reimbursements for grants that include, urban renewal grants, historic preservation, neighborhood development programs, and public facilities loans . The expenses related to these grants must be spent appropriately and prior to applying for reimbursement. The FY 2025-26 Budget for this revenue source is $3,749,606. It is anticipated that most of the reimbursements will be received later in the Fiscal Year, so the City not yet receiving any revenue from this revenue source is within expectations.

All Other CDBG Revenues – This revenue includes CDBG Program income and interest revenue for the HOME Grant fund and the CDBG Revolving Loan fund. These revenue sources are not consistent in nature and are usually substantial payments. First Quarter revenue of $1,950 or 2% of the $103,831 budgeted for FY 2025-26 has been received, which is for loan repayments related to Housing Rehabilitation Loan Program. This is within expectations.

Community Development Commission Comments:

The revenue received from this program is primarily from interest income from loans . No revenue has been received through First Quarter of the $150,000 budgeted for FY 2025-26.

September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
CDBG Administration Reimbursement 3,749,606$ 0$ 0% 3,749,606$ 0$ All Other CDBG Revenues 103,831 1,950 2% 103,831 0 Total CDBG Revenues 3,853,437$ 1,950$ 0% 3,853,437$ 0$

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) REVENUE
September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
Interest Income 150,000$ 0$ 0% 150,000$ 0$ All Other CDC Revenues 0 0 n/a 0 0 Total CDC Revenues 150,000$ 0$ -100% 150,000$ 0$

COMMUNITY DEVELOPMENT COMMISSION (CDC) REVENUE
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

Hesperia Housing Authority (HHA) Revenue Comments:

This program was developed to promote projects that provide affordable housing opportunities. The revenue received from this program is primarily from interest income from investments.

Street Related Funds Revenue Comments:

Measure I - Renewal – This fund is used to account for the renewed Measure I sales tax based on revenue generated from the ½ cent added tax on sales tax in San Bernardino County. For Hesperia, there are no distinctions for Arterial, Local, or Transit, and the revenue is remit ted by San Bernardino County Transportation Authority (SBCTA) to the City.

Since there is a two-month delay receiving the revenue, there was only one remittance to report as of September 30, 2025 YTD totaling $363,601 or 9% of the budget for Fiscal Year 2025-26, which is within expectations.

Gas Tax –The Gas Tax is a state funded revenue source that is a tax on all fuel sold within the City’s jurisdiction. T here is typically a two-month delay from the month close to when the revenue is received. The $148,470 received is 8% of the $1,964,229 budgeted for FY 2025 -26. The amount collected is well within what was anticipated to be collected through the First Quarter.

Gas Tax Swap – As with Gas Tax, t here is typically a two -month delay from the month close to when the revenue is received. The $98,072 received is 10% of the $960,824 budgeted for FY 2025 -26. The amount collected is well within what was anticipated to be collected through the First Quarter.

September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
Interest Income 200,000$ 0$ 0% 200,000$ 0$ Loan Repayments 93,701 0 0% 93,701 0 Miscellaneous Income 1,500 0 0% 1,500 0 Sub-Total HHA Revenue 295,201 0 0% 295,201 0 VVEDA Housing Authority Revenue 88,000 0 0% 88,000 0 Total HHA Revenue 383,201$ 0$ 0% 383,201$ 0$

HESPERIA HOUSING AUTHORITY (HHA) REVENUE
September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
204 Measure I - Renewal 4,095,000$ 363,601$ 9% 4,095,000$ 0$ 205 Gas Tax Fund 1,964,229 148,470 8% 1,964,229 0 206 Gas Tax Swap Fund 960,824 98,072 10% 960,824 0 207 Local Transportation Fund 72,951 0 0% 72,951 0 209 Gas Tax - RMRA 2,745,961 225,113 8% 2,745,961 0 254 AQMD Fund 900 0 0% 900 0 263 Public Works Street Maintenance Fund 27,500 83,955 305% 27,500 0 300 Development Impact Fee-Streets 17,000 0 0% 17,000 0 301 Development Impact Fee-Storm Drain 76,590 0 0% 76,590 0 306 Development Impact Fee 2018 - Streets 14,513,817 1,640,297 11% 14,513,817 0 307 Development Impact Fee 2018 - Drainage 3,511,023 286,587 8% 3,511,023 0 313 Development Impact Fee 2018 - A-04 Drainage 50,000 0 0% 50,000 0 Sub-Total DIF Streets & Storm Drain 18,168,430 1,926,885 11% 18,168,430 0 504 City Streets CIP 4,748,248 7,412 0% 4,748,248 0 Total Street Related Funds 32,784,043$ 2,853,508$ 9% 32,784,043$ 0$

STREET RELATED FUNDS REVENUE
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

Street Related Funds Revenue Comments (Continued):

Local Transportation – This revenue source is mainly funded by the county ¼ cent sales tax and the primary use of this revenue is transportation related, including supporting the operations of Victor Valley Transit Authority (VVTA). This revenue source is no longer expected to be received due to the allocation being fully utilized by VVTA for transit purposes from a decision made by VVTA in April 2022. The FY 202 5-26 revenue estimated to be received of $72,951 consists of solely interest income.

Gas Tax RMRA – This revenue source is State-funded and took effect November 2017 during FY 2017-18. This revenue source is utilized for eligible cities and counties for basic road maintenance, rehabilitation, and critical safety projects on the local streets and road systems. SB 1, the Road Repair and Accountability Act of 2017, increased the gas tax by 12 cents and 20 cents for diesel, which is adjusted for inflation each July starting in July 2020. A one-time payment of $225,113 or 8% of the $2,745,961 budgeted for FY 2025-26 was received.

Public Works-Street Maintenance – The estimated revenues are primarily interest earnings. In addition, this fund will occasionally receive miscellaneous reimbursements on an inconsistent basis. The revenue received through September 2025 of $83,955 or 305% of the $27,500 budgeted for FY 2025-26 entirely consists of miscellaneous revenue, which was a one-time reimbursement for a California Emergency Services Grant.

Development Impact Fees for Streets and Storm Drain/Drainage – Through September 2025 YTD, the combined revenue received is $1,926,885, which is 11% of the $18,168,430 budgeted for FY 2025-26. This revenue source varies each fiscal year depending on the completion of individual projects and the fees associated with each respective project, and is trending as expected.

City Streets CIP – This revenue source tracks grant/reimbursement-funded projects that will improve the quality of the roads in the city, traffic signals throughout the city, and new construction projects that will help improve the day -to-day lives of the City’s residents.

2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

Other City Funds Revenue Comments: Revenue for Other City funds are comprised of various grants, investment income, development impact fees, housing projects, and several other sources.

Pension Obligation Trust and OPEB Trust: This fund was established to manage and mitigate the unfunded pension liability and the post-employment benefits liabilities. The revenue from these funds consists of investment interest income and gain/losses from the market. The $272,846 received through First Quarter or 546% of the $50,000 budgeted for FY 2025-26 vastly exceeded expectations. This significant increase is primarily due to the gains obtained from the stock market due to the overall positive environment for the financial markets. To note, the City has approximately $5.0 million in the Pension Stabilization Trust and $0.9 million in the OPEB Stabilization Trust.

Public Art – This fund is funded through donations to be utilized towards public art displays throughout the City. The FY 2025-26 Budget of $9,056 consists of interest income received during the year.

AB3229 Supplemental Law Fund – The passage of Senate Bill (SB) 89 allowed for the continued funding of the Supplemental Law Enforcement Funding (SLESF). The City expects to receive $315,500 of SLESF funding, which is typically received later in the fiscal year. The first installment received in October is $12,956 and is trending as expected.

Environmental Programs Grant – This fund tracks various grant reimbursements for various environmental events. For FY 2025-26, $95,710 in revenue was budgeted.

September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
105 Pension Obligation Trust 50,000$ 230,358$ 461% 50,000$ 0$ 106 OPEB Trust 0 42,488 n/a 0 0 110 Silverwood 495,400 47,046 9% 495,400 0 210 HFPD (PERS) Interest Income 90,000 74,219 82% 90,000 0 230 Public Art 9,056 0 0% 9,056 0 255 AB3229 Supplemental Law Fund 315,500 0 0% 315,500 0 256 Environmental Programs Grant 95,710 0 0% 95,710 0 260 Disaster Preparedness Grant 1,500 0 0% 1,500 0 261 American Rescue Plan Act Grant 2,256,728 0 0% 2,256,728 0 262 SB 1383 Local Assistance Grant 117,734 0 0% 117,734 0 # /0 302 Development Impact Fee-Fire 50,000 0 0% 50,000 0 303 Development Impact Fee-Police 250 0 0% 250 0 308 Development Impact Fee 2018 - Fire 3,413,891 150,874 4% 3,413,891 0 309 Development Impact Fee 2018 - City Hall 3,090,332 127,520 4% 3,090,332 0 310 Development Impact Fee 2018 - Animal Control 84,278 52,233 62% 84,278 0 311 Development Impact Fee 2018 - Records Storage 153,408 6,069 4% 153,408 0 312 Development Impact Fee 2018 - Police Facilities 59,147 2,341 4% 59,147 0 Sub-Total 302, 303, 304, 308, 309, 310, 311, and 312 6,851,306 339,037 5% 6,851,306 0 402 2012 Water Rights Acquisition 80,000 10,724 13% 80,000 0 404 2023 Refunding Lease Revenue Bon 50,000 2 0% 50,000 0 Sub-Total 402, 403, and 404 130,000 10,727 8% 130,000 0 Total Other City Funds 9,867,534$ 423,982$ 4% 9,867,534$ 0$

OTHER CITY FUNDS REVENUE
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

Other City Funds Revenue Comments (Continued):

American Rescue Plan Act (ARPA) Grant – Coronavirus State and Local Fiscal Recovery Funds – This revenue is the Coronavirus State and Local Fiscal Recovery Funds in which the City received a total amount of $23.4 million in two installments of $11.7 million. The first allocation was received in September 2021, and the second allocation in September 2022. This ARPA funding must be obligated on eligible costs incurred during the period that began on March 3, 2021, and ended on December 31, 2024. The City h as obligated all funds by the December 31, 2024 deadline and is now working to spend all funds by December 31, 2026. The revenue anticipated to be received in FY 2025-26 of $2,256,728 primarily consists of interest income. Revenue collections of $0 for this revenue source through First Quarter is reasonable as the interest income from the ARPA funds are usually received later in the Fiscal Year.

SB 1383 Local Assistance Grant – This state-funded revenue source assists local jurisdictions with implementing SB 1383, which aims to reduce organic waste disposal and increase food waste diversion. The City expects to receive $112,734 for FY 2025-26.

Development Impact Fees -Fire, Police, Public Services, City Hall, Animal Control, and Records Storage – The combined total of $ 339,037 collected for the First Quarter of FY 2025 -26 is 5% of the budgeted amount of $6,851,306 .

This revenue source varies each fiscal year depending on the completion of individual projects.

2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments:

The Hesperia Water District began applying liens to properties with outstanding water bills. Failure to pay within 60 days from the original bill due date, results in the Water District mailing the tenant and property owner a notice of lien. If the bill remains outstanding after an additional 10 days, the Water District will apply a lien on the property. During May of each year, all outstanding property liens will be converted to property tax liens. By doing so, the County will collect outstanding balances as part of property tax collections during the following year. The Water District is utilizing such liens in lieu of water disconnections and traditional collection services as the primary mechanism for collections.

Water Sales – For the first quarter of FY 20 25-26, the Hesperia Water District collected $4,684,936 of sales revenue or 18% of the budgeted amount, which is comparable to the percentage collected through the first quarter in the prior year (FY 2024-25). Overall water sales revenue through September 2025 of $4,684,936 is less than the FY 2024-25 revenue for the same period ($4,813,046) by $128,110 or 3%. This is mainly due to a decrease in Water Sales Residential as consumption decreased from the same per iod in FY 2024 -25. Through September 2025, Water Sales Residential of $1,927,443 is $94,415 less than the $2,023,858 collected through September 2024.

Property Taxes – Property tax revenue has historically been received from November 2025 through July 2026.

Other Water Operating Revenue – Through September 202 5, $474,211 has been received, which is 12 % of the $4,072,093 budgeted for FY 2025-2026. This revenue source consists of Water Meter Service and Water Inspection fees.

September Change From
2025-26 2025-26 Percent 2025-26 Budget To
Budget Actual Received Revised Revised
Water Operating Revenue
Water Sales 25,550,247$ 4,684,936$ 18% 25,550,247$ 0$ Interest Income 600,000 0 0% 600,000 0 Property Taxes 793,820 0 0% 793,820 0 Sub-Total 26,944,067 4,684,936 17% 26,944,067 0 All Other Water Operating Revenues 4,072,093 474,211 12% 4,072,093 0 Total Water Operating Revenues 31,016,160 5,159,146 17% 31,016,160 0 Capital Facilities Charges 1,396,860 4,149,953 297% 1,396,860 0 Grant Reimbursement 0 0 n/a 0 0 Total Water Capital Revenue 1,396,860 4,149,953 297% 1,396,860 0 Reclaimed Water 465,589 56,029 12% 465,589 0 All Other Water Related Revenues 270,000 76,035 28% 270,000 0 Total Water Operating, Capital, & Related Revenues 33,148,609$ 9,441,163$ 28% 33,148,609$ 0$ Sewer Operating Revenue
Sewer Billing 5,868,527$ 1,065,210$ 18% 5,868,527$ 0$ All Other Sewer Operating Revenues 976,403 94,206 10% 976,403 0 Total Sewer Operating Revenue 6,844,930 1,159,416 17% 6,844,930 0 Sewer Connections 500,000 176,195 35% 500,000 0 All Other Sewer Capital Revenues 64,000 0 0% 64,000 0 Total Sewer Capital Revenue 564,000 176,195 31% 564,000 0 All Other Sewer Related Revenues 10,000 0 0% 10,000 0 Total Sewer Operating, Capital, & Related Revenues 7,418,930$ 1,335,612$ 18% 7,418,930$ 0$ Total Hesperia Water District Revenue 40,567,539$ 10,776,775$ 27% 40,567,539$ 0$

WATER DISTRICT REVENUE

2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FISCAL YEAR 2025-26 SEPTEMBER 30, 2025 YEAR-TO-DATE REVENUE REVIEW (Continued)

Water District Revenue Comments (Continued):

Capital Facilities Surcharge – This revenue source consists of fees for new water meter installations based on new development projects. Revenue through September 2025 YTD is $4,149,953, which is 297% of the FY 2025-26 budget of $1,396,860. This can largely be attributed to the purchase of approximately 300 water meter s by the Silverwood Development. Excluding the meters purchased by the Silverwood Development, $690,728 has been collected through September 2025 and are related to other single-family residential projects from Lennar Homes and Richmond American.

Reclaimed Water – Current Reclaimed Water customers are the Golf Course, Hesperia Township (NW corner of 5 th & Smoke Tree), and Hesperia Community Park. As of September 30, 2025, the Water District has collected $56,029, which is 12% of the budgeted amount.

Sewer Billing – Revenue through September 202 5 is $1,065,210, which is currently 18 % of the budgeted amount of $5,868,527 for FY 2025-26. This revenue source is trending as expected.

Sewer Connections - Revenue through September 2025 YTD is $176,195, which is 35% of the $500,000 budgeted for FY 2025-26. This source of revenue depends on new customers connecting to the City’s sewers, which can vary from quarter to quarter as projects are completed in the City. This revenue source will continue to be monitored by staff and will report any updates in the FY 2025-26 Mid-Year report.

2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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DEPARTMENT FY 2025-26 BUDGET EXPENDITURE STATUS SUMMARY

Total City Expenditures – Except for the proposed budget amendments referenced on page 28, the overall assessment of the City’s expenditures through the first quarter of the fiscal year is that expenditures are expected to stay within the FY 2025-26 Amended Budget.

FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS

The City Council's Departmental expenditures are at 12% as of September 2025. Focusing Divisions, the City Council Division is proceeding as planned, with 23% of the budget expended during the first three months of the fiscal year. The City Attorney Division reflects 6% expended through September 30, primarily due to the timing of receiving and processing invoices, as only July invoices were accounted for during the First Quarter. However, the City received additional invoices in October, bringing the City Attorney Division’s total expenditures to 21% for the First Quarter of activity.

The City Manager Department is 28% expended through the First Quarter. This higher percentage reflects the City’s practice of paying the CalPERS unfunded liability in a lump sum each July to take advantage of interest savings. A portion of that payment is distributed across departments, which can result in expenditures exceeding 25% of the total early in the fiscal year.

September Amended
2025-26 2025-26 2025 YTD Percent
Department Expenditure Summary Budget Amended Expenditures Expended City Council 1,113,658$ 1,113,658$ 135,743$ 12% City Manager 1,834,107 1,848,405 519,564 28% Management Services 13,017,822 13,056,931 5,488,045 42% Economic Development 650,684 650,684 87,355 13% Development Services - Community Development 3,169,097 3,171,597 805,626 25% Development Services - Code Compliance 5,993,461 5,990,961 1,340,475 22% Development Services - Public Works 7,483,674 7,430,267 1,446,159 19% Streets Capital Improvement Project (CIP) Funds 31,981,863 32,075,863 387,494 1% Other City Related Funds 5,369,136 5,369,136 31,812 1% Development Services - Water 32,474,673 33,081,673 7,548,680 23% Development Services - Sewer 10,696,400 10,696,400 1,912,671 18% Police 22,889,390 22,889,390 5,666,968 25% Fire District 1,959,733 1,959,733 1,896,318 97% TOTAL CITY EXPENDITURES 138,633,698$ 139,334,698$ 27,266,909$ 20% September Amended
2025-26 2025-26 2025 YTD Percent
City Council Budget Amended Expenditures Expended
100 100 City Council 413,658$ 413,658$ 94,089$ 23% 100 102 City Attorney 700,000 700,000 41,654 6% Total City Council 1,113,658$ 1,113,658$ 135,743$ 12% September Amended
2025-26 2025-26 2025 YTD Percent
Budget Amended Expenditures Expended
City Manager 1,834,107$ 1,848,405$ 519,564$ 28% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Management Services Department has expended 42% of its budget through the First Quarter. Similar to the City Manager Department, the Finance Division is 32% expended, exceeding 25% due to the CalPERS unfunded liability payment made in July. The Human Resources Division also reflects higher expenditures for the quarter, as it includes both the CalPERS payment and the annual insurance payment to the Public Entity Risk Management Authority (PERMA).

Information Technology expenditures are proceeding as planned.

Lastly, Non-Departmental expenditures reflect lower-than-budgeted loss payments for the Hesperia Golf Course. During the summer months, the Golf Course performed better than projected. The budget anticipated monthly losses of $33,000, or $99,000 for the First Quarter. Actual losses totaled $37,674 for the same period, with August recording a profit of $4,260. This results in a savings of $61,326 for the quarter. Staff will continue to monitor Golf Course financials as the colder months approach.

The Economic Development Department has expended 13% of its budget through the First Quarter. This department is made up of three (3) Divisions: Economic Development, Community Development Block Grant (CDBG), and Hesperia Housing Authority (HHA) funds.

The Economic Development Division carries out the City’s economic development functions and has expended 18% through the First Quarter, which is lower than anticipated. This variance is primarily due to the timing of planned projects.

Consistent with the City’s Strategic Plan, $65,000 was budgeted for the development of an Economic Development Action Plan. The City is in the early stages of initiating this project, and no expenditures have been recorded to date.

The Community Development Block Grant (CDBG) Administration has expended 4% as of the First Quarter. This lower percentage is due to the timing of expenditures, as consultant invoices related to CDBG activities are typically received after the close of each quarter.

The Hesperia Housing Authority (HHA) oversees the affordable housing within the City. Through the end of September, the HHA funds are 5% expended, with the majority of the budgeted expenditures for affordable housing monitoring and annual financial audit reporting occurring later in the fiscal year.

September Amended
2025-26 2025-26 2025 YTD Percent
Management Services Budget Amended Expenditures Expended 100 220 Finance 2,629,454$ 2,629,454$ 829,337$ 32% 100 225 Human Resources/ Risk Mgmt. 5,290,831 5,268,033 3,549,890 67% 100 228 Information Technology 3,842,045 3,903,952 900,527 23% 100 229 Non-Departmental 1,255,492 1,255,492 208,291 17% Total Management Services 13,017,822$ 13,056,931$ 5,488,045$ 42% September Amended
2025-26 2025-26 2025 YTD Percent
Economic Development Budget Amended Expenditures Expended 100 Economic Development 431,497$ 431,497$ 77,483$ 18% 251 CDBG Administration 144,883 144,883 6,175 4% 370 Hesperia Housing Authority 74,304 74,304 3,698 5% Total Economic Development 650,684$ 650,684$ 87,355$ 13% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Community Development Division is currently 25% expended through the First Quarter and is proceeding as planned.

The Code Compliance Division, which includes Code Enforcement and Animal Control, is 22% expended through the First Quarter. Similar to other departments, the annual CalPERS unfunded liability payment has contributed to higher expenditures within the Code Enforcement program. Conversely, Animal Control expenditures are lower than expected, at 18%, primarily due to two vacant positions: the Veterinarian and the Community Program Manager. The City is actively recruiting for the Veterinarian position, and the Community Program Manager role is expected to be filled before the end of the calendar year.

Through the end of September, the Public Works Division is 19% expended, which is as expected. • Street Repair, Engineering, and Street Maintenance programs are trending as expected. • The General Fund Capital Improvement Program (CIP) is expected to increase in expenditures as progress continues on the Golf Course Trails Project during the fiscal year. • Building Maintenance, at 18% expended, reflects the timing of planned maintenance projects at City-owned facilities. • Traffic, at 15% expended, is lower than expected due to vacancies that are anticipated to be filled by the end of the calendar year. A second contributing factor is lower -than-anticipated signal maintenance costs through September 30, 2025. This activity will continue to be monitored as the fiscal year progresses.

September Amended
2025-26 2025-26 2025 YTD Percent
D. S. - Community Development Budget Amended Expenditures Expended 100 3000 Planning 1,330,418$ 1,335,918$ 282,460$ 21% 100 3020 Building & Safety 1,838,679 1,835,679 523,166 28% Total D. S. - Community Development 3,169,097$ 3,171,597$ 805,626$ 25% September Amended
2025-26 2025-26 2025 YTD Percent
D. S. - Code Compliance Budget Amended Expenditures Expended 100 3010 Code Enforcement 2,237,546$ 2,235,046$ 679,581$ 30% 100 5000 Animal Control 3,755,915 3,755,915 660,894 18% Total D. S. - Code Compliance 5,993,461$ 5,990,961$ 1,340,475$ 22% September Amended
2025-26 2025-26 2025 YTD Percent
D. S. - Public Works Budget Amended Expenditures Expended 100 3100 Engineering 900,419$ 900,419$ 234,102$ 26% 100 3110 Building Maintenance 1,850,737 1,797,330 327,343 18% 100 Capital Improvement Program 350,000 350,000 0 0% 263 3150 Street Maintenance 2,779,598 2,785,491 617,046 22% 263 3160 Street Repair 180,508 181,615 49,854 27% 263 3170 Traffic 1,422,412 1,415,412 217,814 15% Total D. S. - Public Works 7,483,674$ 7,430,267$ 1,446,159$ 19% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

The Streets Capital Improvement expenditures are expected to increase as progress continues on several key projects, including the Ranchero Aqueduct Crossing, Maple Avenue Street Improvement, FY 2025 –26 Street Improvement Projects, and other street-related improvements. As these projects advance throughout the fiscal year, the percentage of actual expenditures to budget will rise accordingly.

The Other City-Related Funds category is primarily comprised of principal and interest payments for the 2012 Water Rights Acquisition and 2023 Refunding Lease Revenue Bonds, with payments scheduled during the second quarter.

The FY 2025–26 Budget includes $2.3 million to complete the American Rescue Plan Act (ARPA) related expenditures, which are anticipated to be spent by the end of the fiscal year. For historical context, the City of Hesperia was allocated approximately $23.4 million in ARPA funds. In accordance with federal requirements, all funds were to be obligated (assigned to specific projects) by December 31, 2024, and fully expended by December 31, 2026. The City has met the allocation deadline and is nearing completion of the spending deadline.

It should be noted that this $2.3 million is separate from the ARPA-related First Quarter budget amendment of $4.8 million.

The amendment primarily reflects adjustments related to the ARPA-funded Water Line Replacement Project, which was initially anticipated to be completed by June 30, 2025. The project is now expected to be completed by the Mid -Year Report.

September Amended
2025-26 2025-26 2025 YTD Percent
Budget Amended Expenditures Expended
Streets Capital Improvement Project (CIP) Funds 31,981,863$ 32,075,863$ 387,494$ 1% September Amended
2025-26 2025-26 2025 YTD Percent
Budget Amended Expenditures Expended
Other City Related Funds 5,369,136$ 5,369,136$ 31,812$ 1% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

Overall, the Water Operating and Capital funds are 23% expended through September 30, 2025. The following narrative details the progression of each program.
• Source of Supply’s primary responsibility is to secure make-up water lease rights to remedy overproduction. During the First Quarter, the District has not leased or purchased permanent water rights. This typically occurs during the period from April to June.
• At the end of the First Quarter, Production has expended 21% of the budget. The primary reason expenditures are lower than expected is due to the timing of electricity invoices. During the First Quarter, only two months of summer activity were recorded, with the average summer month bill being about $300,000. When factoring in the September billing that was received in October, Production would be 26% expended. • Distribution has utilized 34% of its budget, which is primarily due to the annual payment of the CalPERS unfunded liability.
• Pipeline Maintenance is 26% expended and proceeding as expected. • Engineering is currently 12% expended, primarily due to the inclusion of $900,000 budgeted for the Water and Sewer Master Plans. When factoring out this project, Engineering is 24% expended. Staff anticipates releasing a request for proposals (RFP) for the Water and Sewer Master Plans later in the fiscal year. As discussed during the FY 2025–26 Budget process, this will be a multi -year project, with funds expected to be carried over into subsequent fiscal years.
• Customer Service is 28% expended, which is expected for the first three months of the fiscal year. • Utility Billing is 56% expended, which is due to the $0.4 million write-offs of water service and the document recording costs related to placing delinquent accounts onto the County Property Tax Roll for collection. When the $0.4 million in write-offs is not included to determine the operating costs, Utility Billing is 27% expended. It should be noted that the subsequent collection of the tax liens will be reflected as revenue. • Administration is at 30 % of the budget, which is primarily due to the Water District’s lump -sum payment of the CalPERS unfunded liability.
• Property Management is 17% expended for the First Quarter and is anticipated to increase as facility maintenance projects are completed throughout the fiscal year.
• Street Repair at 22% expended and proceeding as planned.

September Amended
2025-26 2025-26 2025 YTD Percent
D.S. Water Operating & Capital Budget Amended Expenditures Expended 4010 Source of Supply 5,068,641$ 5,068,641$ 5,250$ 0% 4020 Production 5,778,128 5,778,128 1,214,047 21% 4030 Distribution 1,757,302 1,788,302 611,409 34% 4035 Pipeline Maintenance 1,302,323 1,302,323 335,182 26% 4040 Engineering 1,860,489 1,858,289 229,823 12% 4050 Customer Service 2,457,742 2,432,742 692,853 28% 4060 Utility Billing 1,521,567 1,521,567 847,347 56% 4070 Administration 8,831,812 8,831,812 2,644,430 30% 4080 Property Management 510,056 506,256 85,218 17% 4160 Street Repair 1,237,564 1,237,564 274,006 22% 720 Reclaimed Water Operations 293,935 293,935 10,930 4% Total Water Operatiions 30,619,559 30,619,559 6,950,496 23% 701 Water Capital 1,855,114 1,855,114 391,351 21% 703 Water Capital Rehab and Replace 0 607,000 206,833 n/a Total D.S. Water Operating & Capital 32,474,673$ 33,081,673$ 7,548,680$ 23% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

Water Operating and Capital (Continued):
• Reclaimed Water Operations expenditures will increase later in the second half of the fiscal year when the Debt Service payment is due.
• Expenditures for Water Capital are 21% expended as progress is being made on the recoating of tanks at Plants 21, 22, and 23.

Sewer Operating and Capital Funds overall are 18% expended. More detailed information on each program is provided below.

• Sewer Operations expenditures are 20% expended and proceeding as planned. Through the end of the First Quarter, only two months of treatment fees have been expended for Victor Valley Wastewater Reclamation Authority (VVWRA). By factoring in the September invoice that was received in October, Sewer Operations is 27% expended for First Quarter activity.
• Sewer Engineering is currently 19% expended and will increase as contract engineering invoices are received related to sewer projects.
• Sewer Utility Billing is 27% expended, which is expected for the first three months of the fiscal year. • Sewer Administration is proceeding as planned, with 18% expended. • Sewer Capital has $ 1.8 million allocated to two projects: the Maple Avenue sewer line replacement and the I- 15 Corridor sewer. Capital expenditures will increase as progress is made on the projects.

The Police Department budget is 25% expended, which is expected for the first three months of the fiscal year based on monthly law enforcement service costs. The year-to-date total for the first quarter does not yet include the quarterly invoice, which covers overtime, grant expenses, and other related costs, as well as the vacancy savings credits associated with vacant positions.

During FY 2018 –19, the City transferred all Hesperia Fire Protection District (Fire District) assets and liabilities to San Bernardino County Fire, except former personnel obligations. The Fire District continues to function with dedicated funding to meet these obligations. The Fire District is 97% expended, primarily due to annual contractual retirement obligations related to former Fire District employees, which are paid at the beginning of the fiscal year rather than on a monthly basis.

The resulting $63 ,415 in savings will be retained in a trust for the payment of future obligations of former Fire District personnel.

September Amended
2025-26 2025-26 2025 YTD Percent
D. S. - Sewer Operating & Capital Budget Amended Expenditures Expended 4200 Operations 6,564,502$ 6,564,502$ 1,288,791$ 20% 4240 Engineering 277,360 277,360 51,849 19% 4260 Utility Billing 312,753 312,753 85,093 27% 4270 Administration 1,763,615 1,763,615 320,775 18% Total Sewer Operations 8,918,230 8,918,230 1,746,508 20% 711 Sewer Capital 1,778,170 1,778,170 166,163 9% Total D. S. - Sewer Operating & Capital 10,696,400$ 10,696,400$ 1,912,671$ 18% September Amended
2025-26 2025-26 2025 YTD Percent
Budget Amended Expenditures Expended
Police 22,889,390$ 22,889,390$ 5,666,968$ 25% September Amended
2025-26 2025-26 2025 YTD Percent
Budget Amended Expenditures Expended
Fire District 1,959,733$ 1,959,733$ 1,896,318$ 97% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS

September
DEPARTMENT AND PROGRAM 2025- 26 2025-26 2025 YTD Percent EXPENDITURES SUMMARY Budget Amended Expenditures Expended City Council
100 100 City Council 413,658$ 413,658$ 94,089$ 23% 100 102 City Attorney 700,000 700,000 41,654 6% Total City Council 1,113,658$ 1,113,658$ 135,743$ 12% City Manager 1,834,107$ 1,848,405$ 519,564$ 28% Management Services
100 220 Finance 2,629,454$ 2,629,454$ 829,337$ 32% 100 225 Human Resources/Risk Mgmt. 5,290,831 5,268,033 3,549,890 67% 100 228 Information Technology 3,842,045 3,903,952 900,527 23% 100 229 Non-Departmental 1,255,492 1,255,492 208,291 17% Total Management Services 13,017,822$ 13,056,931$ 5,488,045$ 42% Economic Development
100 Economic Development 431,497$ 431,497$ 77,483$ 18% 251 CDBG Administration 144,883 144,883 6,175 4% 370 Hesperia Housing Authority 74,304 74,304 3,698 5% Total Economic Development 650,684$ 650,684$ 87,355$ 13% Development Services - Community Development
100 3000 Planning 1,330,418$ 1,335,918$ 282,460$ 21% 100 3020 Building & Safety 1,838,679 1,835,679 523,166 28% Total D. S. Community Development 3,169,097$ 3,171,597$ 805,626$ 25% Development Services - Code Compliance
100 3010 Code Enforcement 2,237,546$ 2,235,046$ 679,581$ 30% 100 5000 Animal Control 3,755,915 3,755,915 660,894 18% Total D. S. Code Compliance 5,993,461$ 5,990,961$ 1,340,475$ 22% Development Services - Public Works
100 3100 Engineering 900,419$ 900,419$ 234,102$ 26% 100 3110 Building Maintenance 1,850,737 1,797,330 327,343 18% 100 Capital Improvement Program 350,000 350,000 0 0% 263 3150 Street Maintenance 2,779,598 2,785,491 617,046 22% 263 3160 Street Repair 180,508 181,615 49,854 27% 263 3170 Traffic 1,422,412 1,415,412 217,814 15% Total D.S. - Public Works 7,483,674$ 7,430,267$ 1,446,159$ 19%

TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

September
DEPARTMENT AND PROGRAM 2025-26 2025-26 2025 YTD Percent EXPENDITURES SUMMARY Budget Amended Expenditures Expended Streets Capital Improvement Project (CIP)
204 Measure I -2010 Renewal 6,775,591$ 6,869,591$ 43,871$ 1% 207 Local Transportation Fund 679,875 679,875 0 0% 209 Gas Tax - RMRA 6,334,983 6,334,983 61 0% 251 CDBG Streets 3,675,554 3,675,554 84,009 2% 301 Storm Drain Development Impact Fee 1,375,149 1,375,149 0 0% 306 DIF 2018-Streets 5,512,028 5,512,028 10,104 0% 313 A-04 Drainage Development Impact Fee 50,000 50,000 0 0% 504 City Streets CIP 7,578,683 7,578,683 249,449 3% Total Streets CIP Funds 31,981,863$ 32,075,863$ 387,494$ 1% Other City Related Funds
110 Silverwood 495,400$ 495,400$ 2,604$ 1% 241 CFD 2021-1 Residential Maint. & Service 5,200 5,200 640 12% 242 CFD 2022-1 Non-Residential Maint. & Service 5,200 5,200 640 12% 243 CFD 2023-1 Silverwood Maint. 6,500 6,500 640 10% 256 Beverage Recycling Grant 95,710 95,710 3,492 4% 261 American Rescue Plan Act 2,256,728 2,256,728 0 0% 262 SB 1383 Local Assistance Grant 112,734 112,734 23,796 21% 309 City Hall Facilities 2018 Development Impact Fee 198,233 198,233 0 0% 402 Water Rights Acquisition 1,446,531 1,446,531 0 0% 404 2023 Refunding Lease Revenue Bonds 746,900 746,900 0 0% Total Other City Related Funds 5,369,136$ 5,369,136$ 31,812$ 1% Development Services - Water
Water Operating
4010 Source of Supply 5,068,641$ 5,068,641$ 5,250$ 0% 4020 Production 5,778,128 5,778,128 1,214,047 21% 4030 Distribution 1,757,302 1,788,302 611,409 34% 4035 Pipeline Maintenance 1,302,323 1,302,323 335,182 26% 4040 Engineering 1,860,489 1,858,289 229,823 12% 4050 Customer Service 2,457,742 2,432,742 692,853 28% 4060 Utility Billing 1,521,567 1,521,567 847,347 56% 4070 Administration 8,831,812 8,831,812 2,644,430 30% 4080 Property Management 510,056 506,256 85,218 17% 4160 Street Repair 1,237,564 1,237,564 274,006 22% Total Water Operating 30,325,624 30,325,624 6,939,566 23% 701 Water Capital Project 1,855,114 1,855,114 391,351 21% 703 Water Capital Rehab and Replace 0 607,000 206,833 34% 720 Reclaimed Water Operations 293,935 293,935 10,930 4% Total D.S. Water Operating & Capital 32,474,673$ 33,081,673$ 7,548,680$ 23% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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FY 2025-26 TOTAL EXPENDITURES BY DEPARTMENT AND PROGRAMS (Continued)

DEPARTMENT AND PROGRAM 2025-26 2025- 26 2025 YTD Percent EXPENDITURES SUMMARY Budget Amended Expenditures Expended Development Services - Sewer
Sewer Operating
4200 Operations 6,564,502$ 6,564,502$ 1,288,791$ 20% 4240 Engineering 277,360 277,360 51,849 19% 4260 Utility Billing 312,753 312,753 85,093 27% 4270 Administration 1,763,615 1,763,615 320,775 18% Total Sewer Operating 8,918,230 8,918,230 1,746,508 20% 711 Sewer Capital 1,778,170 1,778,170 166,163 9% Total D.S. Sewer Operating & Capital 10,696,400$ 10,696,400$ 1,912,671$ 18% Police 22,889,390$ 22,889,390$ 5,666,968$ 25% Fire District 1,959,733$ 1,959,733$ 1,896,318$ 97%

Total City Expenditures 138,633,698$ 139,334,698$ 27,266,909$ 20% 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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PROPOSED BUDGET AMENDMENTS – SUMMARY

The FY 2025-26 First Quarter Budget Review includes seven (7) budget amendments totaling $5,971,263. The following listing categorizes the proposed budget amendments, with the following pages providing detail for each request:

PROPOSED BUDGET AMENDMENTS – NARRATIVE
City Manager
 SB 1383 CalRecycle Grant $114,766 (Fund 262) – Unanticipated The Department of Resources, Recycling, and Recovery (CalRecycle ) awarded the City $267,124 of grant funding for the SB 1383 Local Assistance Grant Program. Since the award, City staff have worked with CalRecycle and received approval for the use of grant funds for a Waste Characterization Study to determine the percentage of organics and other materials in the City’s waste stream, in compliance with SB 1383 requirements. On June 17, 2025, the City Council approved a professional services agreement with Go2Zero Strategies for a total not- to-exceed amount of $131,685. Due to the timing of CalRecycle’s approval and the approval of the professional services agreement, a budget amendment is needed to carry over the funds to complete the study.

Management Services – Information Technology
 DocAcess – ADA Compliance $20,160 (100-19-228) – New
Under the Americans with Disabilities Act (ADA), Title II, cities are required to ensure that their websites and mobile applications are accessible to people with disabilities. The U.S. Department of Justice issued a final rule in April 2024 requiring compliance with the Web Content Accessibility Guidelines (WCAG) 2.1 Level AA. Cities with populations over 50,000, such as Hesperia, must comply by April 24, 2026, while smaller jur isdictions have until 2027. To meet this requirement, the City negotiated a three-year contract with DocAccess to ensure the accessibility and compliance of City documents available on the website.

Management Services – Information Technology
 Network Firewalls/Licensing Support $144,376 (100-19-228) – Presented to the City Council on May 06, 2025 During an assessment of the City’s information technology infrastructure, it was determined that the network firewalls and wireless access points were nearing the end of their service life. On May 6, 2025, the City Council approved a three-year professional services agreement with Vector Resources, Inc. (dba VectorUSA) for a total amount not to exceed $140,376. The contract includes the provision and installation of Fortinet firewalls, Wi-Fi access points, and associated licensing. These upgrades will re place outdated equipment, strengthen the City’s cybersecurity, and improve network performance across all City facilities. Due to extended lead times, the equipment was not received by June 30, 2025, as originally budgeted; therefore, a budget amendment is needed to carry over the funds to complete the project.

FY 2025-26 1st Quarter Budget Requests General Fund Other Funds Totals

1. SB 1383 CalRecycle (City Manager) 0$ 114,766$ 114,766$

2. DocAccess ADA Compliance (IT) 20,160 0 20,160

3. Network Firewalls/Licensing Support (IT) 144,376 0 144,376

4. Interview Room Recording System (Police) 52,351 0 52,351

5. Increase to Monthly Law Enforcement Costs (Police) 1,384,549 0 1,384,549

6. ARPA Projects (Water/Sewer) 0 4,142,021 4,142,021

7. Water, Sewer, Recycled Water Rate Study (Water/Sewer) 0 113,040 113,040 Total 1st Quarter Budget Amendments Requests 1,601,436$ 4,369,827$ 5,971,263$ 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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PROPOSED BUDGET AMENDMENTS – NARRATIVE (Continued)
Police
 Audio/Video System – Interview Room $52,351 (100-51) – Presented to the City Council on April 15, 2025 On April 15, 2025, the City Council approved a contract with Genetec for an amount not to exceed $52,135 to replace the outdated audio and video recording systems in the Hesperia Police Department’s interview and observation rooms. The new system aims to enhance investigative capabilities by providing secure, high-quality recordings that are essential for court proceedings and compliance with law enforcement standards. Due to material backorders, the equipment was not received by June 30, 2025, as initially planned ; therefore, a budget amendment is required to carry over the funds to complete the project.
 Increase to Monthly Law Enforcement Costs $1,384,549 (100-51) – Unanticipated On October 4, 2025, the County of San Bernardino concluded labor negotiations with the Sheriff’s Employees’ Benefit Association (SEBA). The new Memorandum of Understanding (MOU) includes a 3% salary increase , effective October 4, 2025, followed by a 4% increase, effective October 3, 2026, and another 4% increase, effective October 2, 2027. The net impact of the 3% salary increase, along with benefit adjustments, reflected an overall 6.3% increase to the City’s Schedule A. This equates to $1,384,549 annually or approximately $153,839 per month for the remaining nine months of the fiscal year. As this amount was not anticipated with the adoption of the FY 2025 -26 Budget, the City will utilize its General Fund Balance to cover the increase for FY 2025–26; however, the subsequent year’s increase will be included in the operating budget. Further discussion of the impacts on the FY 2026–27 Budget will be provided in the final section of this report.

Water
 ARPA Project Carryover $3,760,771 (700) – Carryover
On March 4, 2025, the City Council approved FY 20245 -25 Mid-Year Budget Amendments, which included various Water Operating Projects allocated with American Rescue Plan Act (ARPA) funding. Due to extended contract negotiations and lead times on material, several projects were not completed by June 30, 2025, as initially planned; therefore, a budget amendment is needed to carry over the funds to complete the projects, which include $243,76 5 for Rehabilitation of Five Wells, $3,501,623 for Water Service Line Replacements, and $15,383 for Paint and Coat Water Tanks.

 Water, Wastewater, and Recycled Water Rate Study (Rate Study) $113,040 ( 700) – Presented to the City Council on July 15, 2025
As approved by the City Council on July 15, 2025, the Water District engaged a consultant to prepare an updated Water, Sewer, and Recycled Water Rate Study (the Rate Study), as the previous study covered the period from 2017 to 2022. As outlined in the staff report, funding for the Rate Study was to be included in the First Quarter Budget Amendment request.

Sewer
 ARPA Project Carryover $381,250 (710) – Carryover
On March 4, 2025, the City Council approved FY 2024- 25 Mid-Year Budget Amendments, which included various Sewer Operating Projects allocated with American Rescue Plan Act (ARPA) funding. Due to extended lead times on material, the Manhole Repair/Replacement Project was not completed by June 30, 2025, as initially planned; therefore, a budget amendment of $381,250 is needed to carry over the funds to complete this project.

POSITION CHANGE:

A classification change is proposed for the non -represented Deputy Finance Director, reclassifying it from Senior Management to an At-Will Senior Management classification. The position will have an individual employment contract, no auto allowance, and will remain at salary range 46. Beginning in FY 2023-24, each Deputy Director position has been reclassified from Senior Management to At -Will status; the Deputy Finance Director is the final position to complete this transition.
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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ANIMAL CONTROL UPDATE
Use of Vacancy Savings:

As detailed in the Expenditure Section, Animal Control realized savings during the first quarter due to vacancies in the Veterinarian and Community Program Manager positions. These savings total approximately $75,000. The Community Program Manager position is expected to be filled by the end of the calendar year; however, the City continues to actively recruit for the Veterinarian position, which remains challenging given the limited pool of qualified candidates in the region.

To ensure that Animal Control continues to meet community needs despite these staffing gaps, staff will allocate the realized salary savings to the contract services account. This reallocation will allow the City to expand veterinary contracting services, providing additional capacity for the spay and neuter program and maintaining service levels until the Veterinarian position is filled. This temporary measure will help maintain continuity of essential animal care services and support the City’s ongoing commitment to responsible pet ownership and community health.

High Desert Community Foundation 501(c)(3)
The City partners with the High Desert Community Foundation (HDCF) to provide federal tax -exempt status under IRS Section 501(c)(3) for charitable donations benefiting Animal Control. This partnership began in January 2022. As of July 1, 2025, the trust’s beginning balance was $ 134,386. During the first quarter, Animal Control utilized $45,000 to support the Trap-Neuter-Return (TNR) Program. The following table summarizes account activity through the end of the first quarter, resulting in an ending balance of $86,404.

Beginning Balance (July 1, 2025) $ 134,386
Activity During Quarter:

Donations Received 20
Fees Paid (HDCF Administrative Fee) (2) Distributions – TNR Program (45,000)
Net Change in Balance (44,982)
Ending Balance (September 30, 2025) $ 89,404 Animal Control Donation Trust
Cash Flow Summary – First Quarter Ended September 30, 2025 2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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Fiscal Year 2026-27 Budget Outlook

The First Quarter Report not only provides a snapshot of activity from July through September, but also serves as an opportunity to review information that will impact the upcoming budget. To date, the City has received the FY 2026 –27 CalPERS unfunded liability and projected impacts to the Schedule A for law enforcement services, both of which will be key considerations in the next budget cycle.

California Public Employees Retirement System (CalPERS):

In July 2025, the City received the actuarial valuation report for the year ended June 30, 2024. This report outlines the unfunded liability costs that will impact the FY 2026 –27 Budget. According to the report, CalPERS achieved a rate of return of 9.3%, representing a 2.5% positive change from the actuarially assumed rate of 6.8%. The following table provides a summary of the resulting increase in unfunded liability payments for the upcoming FY 2026–27 Budget.

It is anticipated that the FY 2026–27 General Fund Budget will increase by approximately $300,000, which includes adjustments for both the City and Fire District CalPERS Plans. Based on preliminary reporting from CalPERS, as of June 30, 2025, the rate of return was 11.6%, exceeding the actuarially assumed rate of 6.8% by 4.8 percentage points.

This strong performance suggests that the unfunded liability payment for FY 2027–28 is expected to increase at a slower pace than that of FY 2026–27, reflecting the positive investment returns as of June 30, 2025.

County of San Bernardino Safety Contract – Schedule A Increases:

As discussed, on October 4, 2025, the County of San Bernardino concluded labor negotiations with the Sheriff’s Employees’ Benefit Association (SEBA). The new multi -year MOU includes salary increases of 4% effective October 3, 2026, and another 4% effective October 2, 2027. The impact for FY 2025 –26, effective October 4, 2025, resulted in a 6.3% increase, or about $1.4 million over the adopted contract amount of $22.1 million. The 6.3% reflects both the 4% salary adjustment and changes to benefits.

While the City is aware of the salary increases for FY 2026 –27, the benefit changes will not be known until the County releases the final Schedule A in May 2026. For planning purposes, staff is assuming a total increase of 6% for FY 2026-27, reflecting a 4% salary adjustment and a 2% increase in benefits.

Using these assumptions, the anticipated increase to the FY 2026 -27 Schedule A is 6%, or approximately $1.4 million, over the October 2026 Schedule A of $23.5 million, and 12%, or $2.7 million, over the adopted FY 2025 –26 Schedule A of $22.1 million. Since this increase represents ongoing operational costs, it will need to be funded through General Fund operating revenue.

Plan FY 2025-26 FY 2026-27 Difference % Increase
Miscellaneous Plan for the City of Hesperia 1,848,172.00 2,064,357.00 216,185.00 12% Miscellaneous Plan for the HWD 773,469.00 859,205.00 85,736.00 11% Miscellaneous Plan for the HFPD 31,373.00 32,823.00 1,450.00 5% Safety Plan for the HFPD 1,783,162.00 1,858,154.00 74,992.00 4% Total 4,436,176.00 4,814,539.00 378,363.00 9%
General Fund (portion to Fund 263) 3,662,707.00 3,955,334.00 292,627.00 8% Water Fund 773,469.00 859,205.00 85,736.00 11% Total 4,436,176.00 4,814,539.00 378,363.00 9%
UAL Annual Liability
2025-26 FIRST QUARTER BUDGET REVIEW REPORT

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Estimated Increase to Revenue:

Looking ahead, General Fund revenue would need to increase by approximately 4%, or $3.0 million, to cover the FY 2026-27 CalPERS unfunded liability and the projected increase for maintaining the current level of law enforcement service. The General Fund’s largest revenue source, Sales Tax, is only projected to increase by about $0.4 million based on current trends, which, alone, will not be sufficient to offset these anticipated cost increases.

It should be noted that the FY 2025- 26 General Fund Budget was balanced, with revenues exceeding expenditures by $13,084. While it is still early in the development of the FY 2026 –27 Budget, staff will continue to monitor revenues and expenditures closely and provide an updated financial analysis as part of the FY 2025–26 Mid-Year Report.