To: Laguna Beach City Council Members
Re: Consent Item 7
Date: April 13, 2026
Dear Councilmembers:
I am writing in regards to Consent Item 7, which is a first reading of an ordinance amending Chapter 3.24 of the Municipal Code on budgeting procedures. This item was first discussed on March 24, 2026. During that meeting it was proposed that the Code be revised to require a report on current year revenues, expenditures and fund balances be prepared quarterly, rather than the current monthly requirement. Staff expressed concern about workload and the ability to prepare a meaningful monthly analysis. There was a suggestion about doing the more detailed analysis quarterly, but providing some type of less detailed monthly visibility so that Council could check in on progress more regularly. Given the City's current financial situation, I think that was a good compromise solution. However, a monthly "check in" is not incorporated into this first reading document. (Staff did clarify that the proposed policy requires administratively approved budget changes to be reported to Council quarterly.) Similarly, there were public comments at the March 24th meeting about deleting the requirement for Council to authorize the creation and elimination of special funds. There was a concern expressed by the public that amounts Council may have believed were designated for a particular purpose could be transferred to be used for other purposes without the Council's or the public's knowledge. In fact, the current year audited financial statements identify six such previously restricted funds at June 30, 2024 that were included in the general fund as of June 30, 2025. None of those funds, either individually or in the aggregate ($3.2M), would be considered material and including them in the general fund would not seem problematic.
However, to ensure Council is made aware of all such potentially material amounts in the future, it might make sense to set a threshold above which Council authorization would be required for fund creation and elimination, rather than deleting the Council authorization requirement entirely.
In addition, it is not clear whether the amounts in question were actually expended for their authorized purpose or were in fact a transfer of those funds to the general fund for general fund purposes. In the amendment of Code Section 3.24.020 to remove the requirement for Council approval of interfund transfers, it should be made clear that at least at some threshold, approval of transfers between funds does require the approval of Council.
Respectfully,
Mary Locatelli