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QUOTE# QUOTEDATE QUOTEREFERENCE CUSTOMER# GRANDTOTALPHCS4732/4/2025225002053333562$104,392.08 QUOTEDETAILSITEM QTY CDW# UNITPRICE EXT.PRICEProofpoint Email Protection TAP URL & Attachment Defense, Threat Response A1 6006383$27,658.80$27,658.80Mfg. Part#: PP-P1F-S-C-101LicensedThrough:2/28/2026Electronic distribution - NO MEDIAContract: OMNIA Mesa 2024056-01 - GOV (2024056)Proofpoint Data Loss Prevention and Encryption - subscription license (1 ye 1 5670157$7,138.56$7,138.56Mfg. Part#: PP-B-DLPE-S-B-101LicensedThrough:2/28/2026Electronic distribution - NO MEDIAContract: OMNIA Mesa 2024056-01 - GOV (2024056) Proofpoint Email Protection TAP URL & Attachment Defense, Threat Response A1 6006383$27,658.80$27,658.80Mfg. Part#: PP-P1F-S-C-101LicensedThrough:2/28/2027Electronic distribution - NO MEDIAContract: OMNIA Mesa 2024056-01 - GOV (2024056) Proofpoint Data Loss Prevention and Encryption - subscription license (1 ye 1 5670157$7,138.56$7,138.56Mfg. Part#: PP-B-DLPE-S-B-101LicensedThrough:2/28/2027Electronic distribution - NO MEDIAContract: OMNIA Mesa 2024056-01 - GOV (2024056)
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Approval of a Three-Year Subscription for Proofpoint Email Protection in... Page 150 of 174 City of Indio
City Council
February 19, 2025
STAFF REPORT
To: City Council
From: Bryan H. Montgomery, City Manager
Prepared by: Brian Tully, Chief of Police
Subject: Acceptance of a $20,000 Public Safety Answering Point Annual Training Allotment Property addtional of & and Allocation, Program acceptance Evidence revenue in the amount of $4,000.
RECOMMENDATION:
Accept Public Safety Answering Point Annual Training Allotment Program Allocation in the amount of $20,000 and acceptance of $4,000 in additional revenue for Property & Evidence training, and authorize the Finance Department to make the requested budget adjustments listed in the Financial Analysis section.
SUMMARY:
The California Governor’s Office of Emergency Services (Cal OES) 9-1-1 Emergency Training Annual (PSAP) Point Answering disburses Public Branch Communications Safety Allotment (ATA) funds to local PSAPs to support 9-1-1-related training. The City was notified of an increased allocation for the ATA program, receiving an additional $20,000 for a total of $30,000 in Fiscal Year 2024/2025. The City proposes using PSAP ATA funds to reimburse the costs of training for emergency communications personnel, ensuring compliance with state standards and enhancing the effectiveness of 9-1-1 call handling. Additionally, staff recommends the acceptance of projected revenue from firearms destruction proceeds in the amount of $4,000 to be used for training of P&E officers.
BACKGROUND INFORMATION:
The administration and funding of 9-1-1 call routing and answering services are governed by the California Revenue and Taxation Code Sections 41001 – 41176, known as the Emergency Telephone Users Surcharge Act. This legislation establishes the State Emergency Telephone Number Account (SETNA), which funds various 9-1-1-related programs, including the PSAP ATA.
The PSAP ATA program provides reimbursement for eligible training expenses incurred by PSAPs and 9-1-1 County Coordinators. These funds support the continued education and skill development of emergency communications personnel, ensuring that they remain proficient in handling 9-1-1 calls and utilizing evolving emergency response technologies. Eligible expenses include tuition, registration fees, and instructional materials for approved training courses.
With the increased funding allocation, the Indio Police Department will be able to provide additional training opportunities to its dispatch personnel, further strengthening the City's emergency response AGENDA ITEM #10.12
Acceptance of a $20,000 Public Safety Answering Point Annual Training Al... Page 151 of 174 capabilities. The acceptance and use of these funds will help maintain high standards in 9-1-1 service delivery while supporting the professional development of emergency communications staff.
Additionally, staff recommends the acceptance of firearms destruction proceeds in the amount of $4,000 to be used for Property & Evidence training purposes.
FINANCIAL SUMMARY:
Current FY Financial
Impact:
In current year budget: No
Current FY General
Fund Impact:
$24,000.00 Budget adjustment: Yes
Next FY Financial
Impact:
$0.00 Strategic Objective: Public Safety
Source of funds: State PSAP Funds & Firearms
Destruction Proceeds
Fund-Org-Object
Reference:
1014215 524028 Training
Additional Financial Details:
The requested budget adjustments for this fiscal year are as follows:
Increase appropriations:
1014215 524028 Travel & Training $24,000.00
Increase Revenue:
101 407325 Other Police Services $24,000.00
APPROVAL(S):
Brian Tully, Chief of Police Approved - 07 Feb 2025
Jennifer A. Mizrahi, Assistant City Attorney Approved - 10 Feb 2025 Ruby D. Walla, Director of Finance Approved - 10 Feb 2025 Bryan H. Montgomery, City Manager Approved - 11 Feb 2025
Acceptance of a $20,000 Public Safety Answering Point Annual Training Al... Page 152 of 174 City of Indio
City Council
February 19, 2025
STAFF REPORT
To: City Council
From: Bryan H. Montgomery, City Manager
Prepared by: Bryan H. Montgomery, City Manager
Subject: Naming the Indio Multi-Modal Transportation Center after Leo Haynes, Sr., and Nona Haynes
RECOMMENDATION:
Pursuant to the discussion from the last City Council Meeting, name the Indio Multi-Modal Transportation Center after Leo Haynes, Sr., and Nona Haynes.
SUMMARY:
During the naming of the conference rooms for the new City Hall, it was discussed to name the Indio Multi-Modal Transportation Center after Leo Haynes Sr., and Nona Haynes. Mr. Haynes ran a taxi cab service in Indio for many years, was a U.S. Army Veteran, community volunteer for youth programs (Director of Teen Post for 54 years), and was well-respected by those who knew him. See attached photo of Mr. Leo Haynes, Sr., and wife Nona Haynes.
ALTERNATIVES:
Not name or defer naming of the Transportation Center.
ATTACHMENTS:
Attachment 1 - Photo of Mr. Leo Sr., and Nona Haynes
AGENDA ITEM #10.13
Naming the Indio Multi-Modal Transportation Center after Leo Haynes, Sr.... Page 153 of 174
Naming the Indio Multi-Modal Transportation Center after Leo Haynes, Sr.... Page 154 of 174 City of Indio
City Council/Indio Water Authority
February 19, 2025
STAFF REPORT
To: City Council/Indio Water Authority
From: Bryan H. Montgomery, City Manager
Prepared by: Ruby D. Walla, Director of Finance
Subject: Fiscal Year 2024-25 Mid-Year Budget Report
RECOMMENDATION:
That the City Council and the Indio Water Authority Board receive and file the Fiscal Year 2024-25 Mid-Year Budget Report (Attachment A).
SUMMARY:
Attached is the City's Fiscal Year 2024-25 Mid-Year Budget Report. For the most part, City revenue and expenses are tracking within budgeted expectations and there are no current-year financial concerns cited. In regard to the General Fund, the report provides a detailed analysis on revenue, an update on funds held in the contingency account, and an updated future-year financial outlook Preceding the budget report, a cover letter from the city manager summarizes the city’s financial and operational status.
BACKGROUND INFORMATION:
Please refer to Attachment A.
FINANCIAL SUMMARY:
Current FY Financial
Impact:
In current year budget: No
Current FY General
Fund Impact:
Budget adjustment: No
Next FY Financial
Impact:
$0 Strategic Objective:
Source of funds: various Fund-Org-Object
Reference:
various
Additional Financial Details:
Please refer to Attachment A.
ATTACHMENTS:
Attachment A - FY25 Midyear Budget Report
AGENDA ITEM #11.1
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 155 of 174 APPROVAL(S):
Ruby D. Walla, Director of Finance Approved - 13 Feb 2025 Steven Graham Pacifico, City Attorney Approved - 13 Feb 2025 Bryan H. Montgomery, City Manager Approved - 13 Feb 2025
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 156 of 174 Attachment A
February 19, 2025
Honorable Mayor and City Council
100 Civic Center Drive
Indio, CA 92201
SUBJECT: Fiscal Year 24/25 Mid-Year Budget Report
I am pleased to present the Mid-Year Budget Report for fiscal year 2024-2025. The report provides details of current year revenue and expenditure trends, and a multi-year outlook that is based on current economic forecasts and operational trends.
The city's finances are stable, but third-quarter tax filings have been sluggish, and short-term performance has been mixed, leading to a reduction in sales tax projections for fiscal year 2024-25. This downgrade reflects a second consecutive year of statewide revenue declines. Contributing to the economic uncertainty are higher business operating costs and the potential further decline of Federal Funds interest rates into 2025. Additionally, the recent election results have introduced further economic unpredictability. On a national level, consumer confidence has risen, but future policy decisions could push prices higher, potentially leading to fewer sales transactions.
As outlined in last year's update and during the development of the 2024-2025 budget, the 2025 fiscal year has not seen any significant increases. As expected, we are observing a flattening of revenues, with some decreases. However, these declines are mostly offset by increases in other revenue sources, which will be detailed further throughout the Report. The Report does not recommend any mid-year adjustments for changes in revenue, neither increases nor decreases—to the General Fund. The approved General Fund revenue budget of $120.89 million will remain the target through the end of the 2024-2025 fiscal year. Notable events, such as the Coachella and Stagecoach Music Festivals, will also impact the City of Indio as we move through the second half of the fiscal year.
Looking ahead, the updated multi-year projection reflects a slight shift in the City’s financial outlook. The City has experienced several years of significant growth, and the City Council has strategically utilized one-time savings to improve parks, roads, and public buildings. As planned, we have continued to fulfill capital commitments, using up one-time funding and prior-year savings. However, as one-time funding diminishes and key revenue sources, such as sales tax and Measure X, show signs of slowing down with slight declines, the model highlights the importance of managing ongoing cost increases.
While the projection does not anticipate a sharp financial downturn, it signals the need for a more cautious spending approach in the coming years, as operational costs are rising faster than expected revenue growth. Priorities such as pension funding, increased fire and paramedic services, and employee cost-of-living adjustments are expected to consume most, if not all, of the City's revenue growth, potentially leading to a modest
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 157 of 174 Attachment A
budget deficit in fiscal year 2025-26. However, as we prepare to develop the 2025/2026 budget, I anticipate presenting a balanced budget with no operational reductions, while continuing to fund ongoing one-time projects with prior-year funds that were previously committed.
City staff continue to effectively follow the City Council’s direction to “G.S.D.” (get stuff done). Not only does it describe the persistent efforts of staff to fulfil the City Council’s vision, it also captures the gravity of an ambitious multi-year capital improvement plan and the commitment to completing the projects currently in queue. The Public Safety Campus Phase I is complete, Phase II is under design, the Golf Course Clubhouse, Indio Sports Park, City Hall and Library are all well under construction. Significant park and roadway improvements continue, as well as an installation of storm drain infrastructure Downtown and paving a of many Downtown streets. The list continues, and momentum is leading to a more prosperous Indio and stronger sense of pride in our community.
In short, the City of Indio continues to take center stage The work is always challenging, but the progress is undeniable— and our residents and visitors are taking notice. Through diligent planning, budgetary discipline, and an eye on the future, I am confident that the City is heading in the right direction. I am truly honored to be a part of Indio’s progress.
Respectfully submitted,
Bryan H. Montgomery
City Manager
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 158 of 174 Attachment A
3 A.GENERAL FUND - REVENUE SUMMARY
The City’s General Fund adopted budget was developed based on a set of assumptions that forecast total revenue from all sources to reach $120.89 million by the end of the fiscal year. These revenue assumptions were established in May during the previous year’s budget process. At the mid-year point, actual revenues are reviewed and analyzed to assess how they compare to the budget projections and to provide a snapshot of performance relative to the same period in the prior year. A summary of General Fund revenues is presented in the table below, with more detailed information on General Fund revenue in the following sections of this report.
The chart below displays General Fund revenue by source, along with a comparison to the previous year’s actuals and the percent change.
This mid-year report differs from the previous year in that there are no requests to adjust appropriations for additional revenues or any downward adjustments. While some revenue sources are trending below projections, others may exceed expectations. The adopted budget took a conservative approach, which will continue throughout this year. The purpose of this mid-year update is to offer an overview of the current performance and trends for the 2025 fiscal year, helping guide our preparation for the upcoming strategic planning sessions and the next budget cycle for the 2025/2026 fiscal year.
GE NE R AL F UND
Adopted Budget
Actual T hrough Dec. 2024% of Budget
E st. Y T D at J une 30, 2024T axes T ransaction T ax (Measure X )18.50$ 5.43$ 29.4%18.10$ S ales T ax 18.203.8321.0%17.80$ T ransient Occupancy T ax15.274.3728.6%15.27$ P roperty T ax in Lieu of V LF13.90- 0.0%13.90$ P roperty T ax13.215.1438.9%13.21$ Utility Users' T ax10.594.5142.6%10.59$ Business License T ax0.650.2944.7%0.65$ P roperty T ransfer T ax0.450.1430.9%0.45$ Charges for ServicesMusical F estival S ervices5.37- 0.0%5.37$ A mbulance S ervices3.471.9857.1%3.47$ Other S ervices3.532.6976.0%4.00$ Other F inancing SourcesP ublic S afety CF D4.51- 0.0%4.51$ Use of AssetsInterest/R ents/Concessions7.120.8311.6%7.12$ Licenses & PermitsLicenses & P ermits5.281.5930.2%5.28$ F ines & F orfeituresF ines & F orfeitures0.600.2541.7%0.60$ Other F inancing SourcesMiscellaneous R evenue0.150.54357.5%0.54$ IntergovernmentalGrants/R eimbursements0.090.0444.9%0.09$ T otals 120.89$ 31.62$ 26.2%120.9$ R evenue S ummary (in millions)
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 159 of 174 Attachment A
4 GENERAL FUND - REVENUE DETAIL
a) Transaction and Use Tax (Measure X)
Sales tax revenue is the City’s largest source of general-purpose revenue, representing about 30 percent of all General Fund revenue. The City receives typical sales tax revenue, known as Bradley Burns sales tax, and it receives transaction and use tax, locally known as Measure X sales tax. Measure X was a ballot measure approved by residents in 2016 and extended in 2021. Both sales tax rates are one percent of the price of goods sold and are reported separately below for better accountability.
Measure X, transaction and use tax, is applied similarly to regular sales tax, but levied on where the goods are used rather than where the goods are purchased.
Transaction and use tax receipts generally mirror regular sales tax receipts but began to surpass regular sales tax receipts in FY 22 and continues to trend similar today.
As illustrated in the graph above, Measure X sales tax receipts dipped in FY 20 due to the onset of the Coronavirus and state-granted tax-payment deferrals. In FY 21, revenue began to rebound, growing year-over-year for three fiscal years. As discussed during the budget discussions, the City of Indio is beginning to see the flattening of revenues. At mid-year the City is anticipating closing the fiscal year short of the 2024/2025 Measure X transaction & use tax revenue projection by slightly under one percent ($345,383). As of December 2024, revenues are 2.3% less when compared last year at this same time. As depicted in the graph above, revenues are trending flat with $18.1 million versus the $18.5 million budgeted.
The patterned dot markers on the graph represent revenue projections through FY
29. Based on the current data, Measure X sales tax revenue projections have been updated due to the anticipated current year shortfall, projecting $18.3 next fiscal year, before growing at a modest one to two percent a year from FY 2027 through FY 2029.
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 160 of 174 Attachment A
5 b) Sales and Use Tax
Sales tax revenue is projected to miss the 2024-2025 target, reaching $17.8 million instead of the expected $18.2 million. Last year, sales tax revenue also totaled $18.2 million. As shown in the Mid-Year Comparison section of the graph below, sales tax receipts are 2% lower than the revenue collected at this time last year.
This trend is expected to continue through the second half of the fiscal year. The solid line and dot markers on the graph represent actual revenue receipts from FY 2020 to FY 2024, while the patterned dot markers indicate revenue projections through FY 2029. For the next fiscal year, sales tax revenue is expected to return to $18.2 million, consistent with this year's budget amount. Looking further ahead, from FY 2027 to FY 2029, sales tax revenue is projected to grow at a moderate rate of 1 to 2 percent annually.
a) Transient Occupancy Tax (TOT)
The Transient Occupancy Tax (TOT) is applied to individuals staying in the City for up to 30 days, including hotel guests, festival campers, and those renting local residences. Ten years ago, annual TOT revenue was a modest $3.1 million, but by FY 17, the rise in residential vacation rentals led to an increase in short-term lodging stays. The pandemic significantly impacted lodging operations citywide, causing a sharp decline in local tax revenue in FY 20. However, as the pandemic subsided, the lodging sector rebounded. Currently, residential vacation rentals account for approximately 60% of the total local TOT, contributing around $8.9 million of the projected $15.3 million total.
As of December 2024, TOT revenue is lower than it was at this time last year, mainly due to the absence of residential rentals tied to the Power Trip concert in October 2023. Since Power Trip did not return this year, this has contributed to the decrease in TOT revenue. During budget discussions, the decline in festival activity was acknowledged and reflected in the current revenue projections of $15.3 million.
Staff is not recommending any adjustments to the TOT revenue forecast.
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 161 of 174 Attachment A
6 The graph below shows TOT revenue collected from FY 2020 to FY 2024, along with revenue projections through FY 2029. This year’s TOT receipts are not expected to exceed last year’s, given that the Power Trip event did not return. Looking ahead, future TOT revenue is projected to grow modestly at a rate of 1 to 2 percent per year through FY 2029, but it is not expected to reach the peak levels seen in FY 2024.
b) Property Tax In-Lieu of Vehicle License Fees (VLF)
VLF revenue is the City’s fourth largest source of general-purpose revenue. In FY 05, the state legislature opted to replace local Vehicle License Fee (VLF) revenue with an equal amount of property tax revenue. Since that time, VLF revenue allotted to the City has been based on changes in both local property values and population. In recent years, the City has benefited from both increases in population and local property values. As a result, VLF revenue has correspondingly increased.
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 162 of 174 Attachment A
7 The County of Riverside determines the City’s Vehicle License Fee (VLF) allocation and usually distributes half of the amount in February. The graph above shows actual receipts from FY 2020, along with revenue projections through FY 2029.
Future receipts are expected to grow by 1 to 2 percent annually, based on the historical average, driven by anticipated steady increases in property values and population.
c) Property Tax
Property tax revenue is the City’s fifth largest general-purpose revenue source.
Since FY 17, property tax revenue has grown on average, six percent a year.
Notwithstanding the shortage of homes for sale and the high costs of borrowing in FY 23, property tax revenue grew 13 percent last year. Tax gains experienced in FY 23 are tied to FY 22 property values, so current-year receipts are not expected to grow as much as they did last year. Nonetheless, with mortgage rates expected to decline over the next 12 months, home sales are expected to bounce back, ensuring consistent growth in future fiscal-year revenue.
The preceding graph depicts property tax revenue received since FY 2020 and includes revenue projections through FY 2029. Future year revenue is projected to grow five percent a year as residential and commercial construction continues to occur.
d) Utility Users’ Tax (UUT)
The local Utility Users’ Tax (UUT) rate is six percent, assessed on telephone, gas, electric, and water usage; and three percent assessed on cable television usage.
UUT revenue is remitted to the City by each utility company. Between FY 16 and FY 20, UUT receipts were lethargic, slightly declining in three of those five years. In FY 21, UUT began to grow, driven by increased utility rates, new household accounts, and a resurgence of business activity following the pandemic. Gains are offset by tax exemptions offered to local primary homeowners over the age of 61.
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 163 of 174 Attachment A
8 Midyear
Comparison
The City’s UUT revenue expectation is currently set at $10.6 million, overall UUT revenues are down 4.7% compared to the prior year which can be attributed to the timing of collections and posting of receipts.
The following UUT graph illustrates actual receipts through FY 2024 and includes revenue projections through FY 2029. Future-year UUT revenue is presumed to stabilize, generating an average of $10.9 million per year over the next 5-years. e) Business License Tax
Business License Tax revenue is a tax imposed on all businesses transacting or advertising in the City. The tax is based on the amount of gross revenue a business generates within the City’s jurisdiction. Most businesses are charged $107 to $151 annually depending on whether business is processing a new business license application or renewing. Staff expect to receive $650,000 in business tax revenue this fiscal year and receipts through December are up 2.7% when compared to last year.
f) Property Transfer Tax
Property Transfer Tax is imposed when property is sold, assigned, transferred, or otherwise conveyed to a purchaser within the City’s jurisdiction. The tax rate is $0.275 for each $500 or fractional part thereof. Local Property Transfer Tax spiked in FY 22, totaling $979,009 due to significant post-pandemic activity and concerns over future interest rates hikes. Last year, the City received $534,122 in transfer tax revenue. This year, transfer tax is expected to total $450,000. g) Charges for Services
Services for which the City is compensated include ambulance services, engineering services, fire inspections, school resource officers, false alarm responses, and the administration of local assessment districts. The City also expects to be reimbursed $5.4 million for services rendered in support of the Coachella Music and Art Festival and the Stagecoach Country Music Festival. The Power Trip concert did not return this past fall is a factor when comparing actuals on a year or year basis. However,
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 164 of 174 Attachment A
9 aware of Power Trip or the like not returning was considered and properly adjusted during the budget process. The City contracts with several law enforcement agencies to protect local festival goers and is reimbursed accordingly by festival promoters.
Within this revenue category, the City collects fees for local ambulance services.
Due to federal and state reimbursement limits for Medi-Cal and Medicare patients, ambulance fees only cover a small portion of actual operational costs. Recognizing the financial burden on local ambulance providers, in 2017 the state adopted SB 523. The bill directed the California Department of Health Care Services (DHCS) to implement a program that provided supplemental Medi-Cal payments to local emergency transport providers. Soon after, in 2019, AB 1705 provided add-on increases to the associated Medi-Cal fee-for-service fee schedule. Financial benefits to Indio have been modest, but several payments from the state are still pending.
Recently, the Centers for Medicare and Medicaid Services approved SPA 24-0002 to increase the add-on amount to the base rate per claim from $220.80 to $1,049.98 increasing the amount per claim to $1,1168.18 for the period of if January 2024 – December 2024 providing approximately $128,000 in additional general fund revenue. The City of Indio pays to participate in the reimbursement program (approx. $700,000). The expectation is that gains will outpace costs as the program matures and becomes permanent. Ambulance fees are expected to total $3.46 million at year-end and overall, Charges for Services are expected to total $12.3 million this year.
h) Other Financing Sources
This category of revenue represents funds that are collected in non-General Fund accounts and transferred into the General Fund to cover specific services. Revenue from Other Financing Sources is expected to total $4.5 million this fiscal year, due to the transfer of assessment revenue from two public-safety community facilities districts (CFD’s 2004-1 and 2004-2) that partially fund police and fire/paramedic operations. Indications are that this revenue source is on target. i) Use of Assets
Use of Assets, also called Use of Money and Property, is a category for City revenue representing income generated through the rental, lease, sale, and investment of City resources. Within this category, the City recognizes revenue attributed to exclusive arrangements for waste disposal ($2.17 million), festival activities ($2.6 million), interest earning ($500,000), various facility rentals and leases ($390,896), and other utility and towing right-of-way concessions ($1.28 million) for a total of $7.11 million.
j) Licenses and Permits
License and permit revenue is collected to cover the costs of regulating various City activities such as local business activity, short-term residential rentals, building and construction, and alarm-system usage. The majority of the revenue collected in this category is associated with building and planning services. The current year’s revenue projection totals $5.21 million. Overall, licenses and permits is not
Fiscal Year 2024-25 Mid-Year Budget Report (Ruby D. Walla, Director of F... Page 165 of 174 Attachment A
10 trending as positively as reported last year. Short-term rental permit revenue is down by 50% when compared to this time last year. Over the last two years the City has seen increases in short-term rental permit revenue due to the rate increases adopted in 2018. Short-term rental permit revenue has been trending at $1.9 million per year over the last two years and are anticipating falling just shy of the $2 million revenue projection leading into the festival season. The uncertainty of the effects of new residential rental standards on local residential activity may now be present. k) Fines and Forfeitures
Revenue within this category is predominantly generated from vehicle, parking, and other code enforcement fines. The current budget assumes Fine and Forfeiture revenue will total $600,000. Through mid-year, Fine and Forfeiture revenue is trending on target.
l) Miscellaneous Revenue and Reimbursements
Miscellaneous revenue encompasses funding that does not fit into any other major revenue category. The current budget assumes miscellaneous revenue will total $150,000.
m) Federal and State Reimbursements
Miscellaneous state and federal reimbursements consist of revenue collected for peace officer standards and training (POST), various state mandates, and ground emergency medical transport (GEMT). The current budget assumes federal, and state reimbursements will total $155,000.
B.APPROPRIATIONS FOR CONTINGENCY
Funds held in the contingency account represent current year resources that are available to cover future expenditures, potential shortfall in discretionary revenue, or other City priorities. Spending authority is added to the contingency account by the City Council. The City Manager is granted authority to reallocate spending authority from the contingency account to other City functions as long as those reallocations line up with the policy direction given by the City Council. Funds remaining within the contingency account at yearend typically become available to bolster City reserves or fund future year projects.
As a matter of procedure, when new revenue is budgeted, a budget-expenditure account called Appropriations for Contingency is increased an equal amount. Funds that are budgeted in the contingency account represent current-year resources that are available to cover unanticipated expenditures or other City priorities.
Expenditures are never charged to the contingency account. Instead, spending authority is moved from the contingency account to the budget unit that best represents the nature and cause of the expense. Per City policy, the City Manager has authority to reallocate funds from the contingency account to other budget units. For transparency, past and recommended withdrawals from the contingency account are summarized in Section C of this report.
When the budget was adopted, the City Council appropriated $700,000 in the City’s
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11 contingency account. As of mid-year, $700,000 remains. The City Manager has not had to reallocate contingency funds to cover various expenditure needs until this mid-year update as indicated on the contingency table below. Staff recommend reallocating $180,000 from the contingency account for various priorities that will be outlined for consideration and approval at the end of this report and summarized below.
C.GENERAL FUND - MULTIPLE-YEAR PROJECTION
The multi-year budget projection is a planning tool that forecasts General Fund revenue as well as future-year expenses for five years. At best, the multi-year projection infers that spending will not exceed revenue. At worst, the model suggests that not all long-term priorities can be funded. The model reflects possible budget surpluses as well as potential budget deficits, allowing for advance planning.
The model incorporates revenue assumptions consistent with revenue projections provided in the General Fund Revenue Section in this report. The model also presumes that appropriations approved by the City Council in any one year roll forward into the next unless appropriated for a one-time purpose. The model has been updated with expenditure projections consistent with the assumptions outlined below. Understanding the model’s assumptions is key to understanding the model’s outcomes, particularly relating to the Measure X set aside. The Measure X set aside represents funds for one-time projects as determined by the City Council.
In general, the model indicates that the City will have sufficient resources next year to cover expected costs excluding $3.92 million in available Measure X sales tax revenue (Measure X set aside) and $500,000 appropriated for contingencies; indicating an estimated surplus of $280,000.
Based on the model, expenditures will begin to outpace revenue through FY 28/29.
Given the number of budget-balancing options available, the City Council’s proactive approach to only budgeting operational costs that are within budget and the potential for better-than-expected revenue growth, and balanced operational budget can reasonably be accomplished. However, balancing the budget will require significant discipline and never utilizing one-time revenues for recurring expenditures. Staff recommends that the City Council remains steadfast in its resolve to not use Measure X resources for ongoing operations. As budget challenges near, it is staff’s responsibility to suggest reductions in spendings, identify operational efficiencies, and pinpoint new revenue streams before recommending budget cuts or drawing down reserves.
Appropriations for ContingencyAppropriationBalanceBeginning balance as of 07/01/2024: $ 700,000.00 Economic Development (120,000.00)580,000.00$ Economic Development - Tenant Improvements(60,000.00)520,000.00$ Adjusted Balance520,000.00$
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12 a) Revenue
General Fund revenue is expected to grow about $2.5 million a year (2-3%) as detailed in the revenue section of this report (Section A). The forecast has been adjustment taking in account prior year actual, current economic trends, and various factors that directly impact the City. City revenue is heavily reliant on the economy and consumer-spending trends, which can change abruptly, generating unexpected gains, as well as unplanned losses. Based on today’s economic indicators and the political climate, the City’s five-year revenue forecast is conservatively optimistic.
b) Salary and Benefits
Salary and benefit costs include wages, healthcare, and overtime costs for 293 full- time employees, including 81 sworn police officers. Annual merit increases and retirement costs— passed on to the City from CalPERS will raise costs about $2 million a year. This year, the City agreed to various wage enhancements for police officers, including a four percent cost of living adjustment (COLA). c) General Operations
General Operations embodies operational budgets for all General Fund departments. General Operations is assumed to increase two percent a year to cover the growing cost of various professional services, insurance, and materials and supplies.
General Fund Multi-year Projection (In Millions) Adopted Budget 24/2525/26 26/27 27/2828/29SOURCESRevenue 120.89123.31125.77128.29130.86 USESSalary & Benefits41.1042.3343.6044.9146.26General Operations33.6335.3135.3137.0838.93Fire & Ambulance Services22.1223.2324.3925.6126.89One-time Projects23.10- - - -General Fund Contingency0.700.500.500.500.50Vehicles & Equipment0.750.650.650.650.65General Park & Maint & Ops*3.303.403.503.613.71Emergency Reserve (Policy)0.500.500.370.370.39Measure X Retiree Health Care1.501.501.501.501.50Measure X Road Rehabilitation5.005.005.005.005.00Measure X Debt Service4.127.888.138.138.13Measure X Project Set Aside- 3.923.873.954.03Subtotal Uses 135.82124.22126.82131.30135.99Fund Balance Increase/Decrease(14.93)(0.91)(1.05)(3.01)(5.14) Reserve Requirement (15% of revenue)18.1318.5018.8719.2419.63Project Reserve Balance w/ Annual contributions18.5019.0019.3719.7420.130.370.500.500.500.50
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13 d) Fire and Ambulance Services
The City contracts with the County of Riverside for fire and ambulance services. The County in turn contracts with the state (CalFire). Changes to the labor agreement between CalFire staff and the state are expected to raise City-service costs significantly over the coming years. Retroactive cost of living allowances, changes in the number of normal weekly working hours, and longevity and education pay incentives are the main drivers. As County Fire transitions from a 72-hour workweek to 66 hours and eventually to 56 hours, more staff will be needed to properly staff local fire engines and ambulances. Future-year contract costs are expected to increase annually between $1-1.5 million a year. e) One-time Projects
This current fiscal year, the City Council continued one-time project commitments of $24 million and committed an additional $23.1 million for a total commitment of $47.5 million. These projects are programmed within the CIP schedule or designated operational budget. A portion of those funds supplement an ambitious $136 million capital improvement plan. The $47.5 million was budgeted this year for the following projects:
Looking ahead, the use of one-time General Fund resources will be limited to annual budget savings from the year before, if any; and any Measure X revenues available for one-time projects. Therefore, no future funding is reflected in the model for future one-time projects.
f) General Fund Contingency
Funds held in the General Fund contingency account represent the availability of current-year resources that have not been programed for a particular City priority.
Funds held in the account are at the City Council’s, as well as the City Manager’s, discretion to use on any unforeseen City priority. Unused contingency funds at the end if the fiscal year becomes available for future-year use. In the model, $700,000 has been appropriated this fiscal year for contingency. g) Vehicles and Equipment
The City traditionally appropriates $500,000 a year to replace dilapidated vehicles and equipment, including old street sweepers, utility trucks, ambulances, and police cars. In addition to the $500,000 this fiscal year, $750,000 continued to be rolled from fiscal year 2023/2024 to the City’s share of a new fire ladder truck. Staff recommends that a reserve fund for a replacement of vehicles and equipment be considered in the upcoming budget discussions.
h) General Park Maintenance
The City appropriated $3.3 million (excluding the cost of salary and benefits) this year to cover the cost of park and parkway maintenance. Park appropriations cover the cost of landscape, water, and equipment repairs. The Indio Sports Project is underway, and ongoing maintenance and utility costs will be evaluated as we prepare the next fiscal year budget.
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14 i) Emergency Reserve
The Emergency Reserve, also known as the reserve for economic uncertainty, represents resources that are officially set aside by the City Council for emergencies. The funds can be spent to cover the cost of an urgent City priority, but generally remain untouched. City policy stipulates that for financial stability, the emergency reserve balance should equal or exceed fifteen percent of all ongoing General Fund revenue. Considering policy guidelines and expected revenue increases over the projected five-year period, the model assumes funding will be allocated to the emergency reserve to maintain the minimum fifteen-percent threshold.
j) Measure X Retiree Health Care Set Aside
The City offers varying levels of lifetime health care benefits to employees that retire from the City. Bi-annually, the City is obligated to quantify the cost of that benefit for both existing and future retirees. The latest valuation sets the net liability at $51.8 million. To mitigate the growing financial impact, the City is working with its labor unions to sunset this benefit. Whether the benefit ends for future employees or not, the City needs to set aside funds to cover the cost of this obligation. To date, only a small amount ($2.2 million) has been set aside specifically for retiree health care. Staff recommends an annual contribution into the retiree health care trust account, until such time that the liability is at least 50 percent funded. k) Measure X Road Rehabilitation
The City Council is very mindful of how Measure X sales tax resources are spent.
Measure X expenditures are vetted by a citizens financial committee to make sure they line with the approved ballot measure. Nothing in the measure precludes the Council from spending the funds on ongoing costs. Nonetheless, besides covering bond debt, the majority of the funds have been used to cover expenses that do obligate or encumber future-year resources. Besides debt, the City Council has directed staff to dedicate $4-5 million annually to local road maintenance. In accordance with the direction, the multi-year model earmarks $5 million for annual road rehabilitation.
l) Measure X Debt Service
The City Council acutely oversees the use of Measure X sales tax resources, sparingly dedicating the funds to ongoing obligations. The one exception is the use of Measure X resources to cover bond debt. Measure X resources are used to cover annual debt payments for bonds issued in 2017 to cover Jefferson Interchange obligations ($1.2 million) and annual debt payments for bonds issued in 2022 to cover public facility construction costs for six new public facilities ($2.9 million): city hall, public safety building, library, fire station, and a 911 dispatch facility.
Jefferson bond payments are relatively steady and will end in 2037. Public facility bond payments are ramping up as construction commences and will level off at about $7 million a year through 2038, before dropping to about $5.7 million through 2053.
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15 m) Measure X Set Aside
The Measure X set aside represents the balance of Measure X funds available for any City Council priority after reducing the available balance to cover a limited list City Council approved uses: retiree health care ($1.5 million), road maintenance ($5 million), and annual debt payments ($4.12 million). The beginning Measure X balance is based on projected transaction and use tax revenue built into that year’s revenue budget. The budget takes into consideration historical revenue trends, present resident spending patterns, and future factors that could positively or negatively affect the local economy. The City Council has directed staff to identify and segregate Measure X funds from other expenditures.
At the beginning of each fiscal year, when the City Council sets and adopts the future-year budget, funds in the Measure X Set Aside are utilized, typically to cover a capital project or another one-time operational need. If the funds are not used in the year they are received, the remaining balance rolls forward to be used the following year.
Fund Balance Increase/(Decrease)
Changes in fund balance represent the projected difference between budgeted expenditures and estimated revenue. A decrease in fund balance is sometimes expected because the City is using resources received in a prior year to cover the cost of current-year projects, which is the case in FY 24/25. Future-year increases in fund balance represent more revenue than planned expenditures, while decreases in fund balance foreshadow expenses that are more than projected revenue. The multi-year projection indicates the likelihood of modest budget surplus next fiscal year, followed by the need to reduce expenditures in fiscal year’s 25/26 through 27/28 if the use of reserves—funds set aside for emergencies—is not the City Council’s preference. Projected shortfalls are small and revenue growth could be better than predicted. In addition, the model administratively recognizes a Measure X set aside, which could be used to cover any temporary budget shortfalls.
D.GENERAL FUND - FUND BALANCE SUMMARY
Fund balance represents City assets in excess of its liabilities. Fund balance effectively reflects the City’s net financial position in its most significant operating fund, the General Fund. Fund balance changes each year based on gains (under- spending and revenue surpluses) and losses (overspending and revenue shortfalls).
For consistent government-financial reporting across the United States, fund balance is categorized into five categories, as defined and utilized below.
General Fund Fund Balance (FB) Multi-year Projection (In Millions) Ending FB FY20/21
Ending FB FY21/22
Ending FB FY22/23
Ending FB FY23/24
Ending FB FY24/25NON-SPE NDABLE8.65 8.628.798.69 8.60R E ST R ICT E D 1.21 1.242.392.65 3.66COMMIT T E D (By Council)12.0015.0017.0018.0018.50ASSIGNE D 12.0844.1822.6923.60-UNASSIGNE D 19.8014.2714.908.67 8.67T OT AL 53.7483.3165.7761.6139.43
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16 Non-spendable fund balance represents resources that cannot be spent because they are not in a spendable form. At the end of FY 2023/2024, the City had $8.6 million in non-spendable fund balance, representing prepaid expenditures ($182,095), land held for resale ($5.34 million), and a note receivable ($3.3 million). Non-spendable fund balance is expected to decrease by the end of the fiscal year mostly due to payments on the outstanding note.
Restricted fund balance represents resources that are subject to external enforceable legal constraints. The funds captured in this category are only expendable on City pension obligations and are held in an IRS Section 115 trust account.
Committed fund balance represents resources that are officially set aside by the City Council for a “rainy day” emergency. The portion of fund balance categorized as “committed” represents funds put aside to mitigate the financial effects of a severe economic downturn, a natural disaster, or other unforeseeable calamity. The funds can also be spent to cover the cost of an urgent City priority as directed by the City Council. At the end of FY 23/24, the City’s emergency reserve totaled $18 million. City policy stipulates that for financial stability the emergency reserve should equal or exceed 15 percent of ongoing General Fund revenue.
Assigned fund balance represents resources that are earmarked by City administration for a justifiable operational purpose and/or to cover various future- year projects and know Council priorities.
Unassigned fund balance represents resources that have not been categorized as non- spendable, restricted, committed, or assigned.
E.FY 2024/2025 MID-YEAR DEPARTMENT SUMMARY AND RECOMMENDED
BUDGET ADJUSTMENTS
This section of the Report is used to summarize the status of departmental appropriations at mid-year. As communicated earlier there are no budget adjustments recommended in the Report. Departments have been responsibly evaluating their budgets to re-allocate funding to fund the necessary operational expenses. As shown below, department operational expenditures to-date are in line with the adopted budget.
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17 Department/Division
2024/2025
Adopted
Budget December 2024%
ADMINISTRATION
City Council 415,710$ 162,942$ 39%
City Attorney 800,000 147,01318%
City Manager 1,350,511 600,98045%
Human Resources 1,390,615 464,56833%
Senior Services 1,085,278 511,02947%
Teen Services 1,294,034 569,33144%
Community Services 1,702,035 781,38746%
City Clerk 578,482 226,29839%
Finance 2,505,098 918,55037%
Communications & Marketing 737,096 279,80238%
City Beautification 703,578 133,50719%
Animal Control 1,280,000 449,64035%
Emergency Prepared. 265,959 104,39339%
Total Administration 14,108,396 5,349,44038%
PUBLIC WORKS
PW Eng. and Admin. 2,135,352 907,70243%
Parks and Parkways 4,105,554 1,582,94839%
Street Maint and Ops 3,438,053 1,523,73244%
Total Public Works 9,678,959 4,014,38241%
COMMUNITY DEVELOPMENT
Building and Safety 2,315,160 1,024,57744%
Planning 1,889,557 591,46531%
Total Community Development 4,204,717 1,616,04238%
POLICE SERVICES
Police Administration 2,985,721 1,391,20947%
Police Field Services 19,362,420 8,498,48744%
Police Investigations 9,935,617 2,403,22724%
Police Traffic Safety 1,486,865 651,34344%
Police Support Services 6,123,363 2,397,47239%
Code Enforcement 3,249,188 1,119,46634%
Total Police Protection 43,143,174 16,461,20338%
FIRE AND AMBULANCE 22,128,324 932,099 4%
ECONOMIC DEVELOPMENT 1,526,724 567,16337%
NON-DEPARTMENTAL 9,706,955 1,326,64714%
MEASURE X 18,500,000 - 0%
Grand Total 122,997,249$ 30,266,976$ 25%
GENERAL FUND APPROPRIATIONS BY DEPARTMENT AND DIVISION
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18 SUMMARY BY EXPENDITURE CATEGORY
Category
2024/2025
Adopted
Budget December 2024
SALARIES & BENEFITS 41,066,709$ 16,497,601$
PURCHASED SERVICES 40,402,174 3,562,011
MATERIALS & SUPPLIES 889,550 371,007
OTHER OPERATING EXPENSES 5,750,000 1,270,092
CAPITAL ASSETS & DEBT 2,597,663 77,949
INTERFUND EXPENSES 16,970,054 8,484,998
OTHER FINANCING USES 14,621,099 3,319
APPROPRIATIONS FOR CONTINGENCY700,000
Total 122,997,249$ 30,266,976$
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