STAFF REPORT
Meeting Date:
April 14, 2026
CONSENT
SUBJECT: FIRST READING OF AN ORDINANCE AMENDING CHAPTER 3.24 OF THE LAGUNA BEACH MUNICIPAL CODE REGARDING THE CITY’S FINANCIAL GUIDELINES AND BUDGETING PROCEDURES, DELETING SECTION 3.01.060
REGARDING BOND REQUIREMENT FOR THE FINANCE DIRECTOR, AND
RESOLUTION APPROVING CITY COUNCIL POLICY FOR BUDGET CHANGE
REQUEST PROCESS
RECOMMENDATIONS: It is recommended that the City Council:
1. Introduce and waive first reading for an Ordinance titled, "AN ORDINANCE OF THE CITY COUNCIL OF LAGUNA BEACH, CALIFORNIA, AMENDING CHAPTER 3.24 OF THE LAGUNA BEACH MUNICIPAL CODE REGARDING THE CITY’S FINANCIAL GUIDELINES AND BUDGETING PROCEDURES, DELETING SECTION 3.01.060 DEALING
WITH A BOND REQUIREMENT FOR THE FINANCE DIRECTOR, AND FINDING THE
ORDINANCE IS NOT A PROJECT SUBJECT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT”;
2. Adopt the Resolution titled, “ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF THE CITY OF LAGUNA BEACH, CALIFORNIA, ADOPTING CITY COUNCIL POLICY NO.
4.1, BUDGET CHANGE REQUEST POLICY, TO BE ADDED TO THE CITY COUNCIL
POLICY AND PROCEDURES MANUAL, AND FINDING SUCH ACTION EXEMPT FROM
THE CALIFORNIA ENVIRONMENTAL QUALITY ACT UNDER STATE CEQA GUIDELINES SECTION 15378”; and
3. Find that the recommended action is not a project under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378.
SUMMARY OF THE MATTER
The City Council held a study session on March 24, 2026, to review staff’s recommended changes to Laguna Beach Municipal Code (LBMC) Chapter 3.24 and new City Council Policy No. 1.4, Budget Change Request Process. The Ordinance included in Attachment 1 to the staff report includes the proposed changes that were discussed during the study session. In addition, additional changes are included. Staff is recommending Section 3.24.010 Budget Preparation and Approval is amended to clarify the Planning Commission’s review of the capital improvement program focused on the program’s consistency with the City’s general plan, which is consistent with state law. In addition, staff is recommending the dollar threshold for the return of funds (Section 3.24.050) to increase from five thousand dollars to ten thousand dollars. The frequency of refunds above this threshold is infrequent. Finally, section 3.01.060 is proposed to be deleted in its entirety as the requirement of a corporate surety bond by the Finance Director is somewhat outdated and the City’s existing insurance would address any issues meant to be addressed by the corporate surety bond. Attachment 2 includes the Resolution to approve City Council Policy No. 4.1, Budget Change Process. The only modification made since the March 24th study session was to clarify the FIRST READING OF AN ORDINANCE AMENDING CHAPTER 3.24 OF THE LAGUNA BEACH MUNICIPAL CODE REGARDING THE CITY’S FINANCIAL GUIDELINES AND BUDGETING
PROCEDURES AND APPROVAL OF BUDGET CHANGE PROCESS ADMINISTRATIVE POLICY
April 14, 2026
City’s assessment district funds are not subject to this policy because the accounting and budgeting for those funds are addressed in the related debt agreements. Lastly, staff would like to clarify the proposed policy presented on March 24th, already included language regarding staff reporting budget changes approved administratively to the City Council quarterly (page 2, Section G of the policy).
DISCUSSION
The City Council adopts the City’s annual operating and capital budget in June of each year. Throughout the fiscal year, it is very common practice that changes to the budget are needed to address unexpected events or new issues that arise post budget adoption. The best practice is for staff to be able to timely address budgetary changes in order to effectively monitor the City’s budget.
The proposed changes were discussed with the City Council during the study session held on March 24, 2026. The proposed changes to the LBMC include the feedback received from the City Council during the study session, which included, requiring the proposed budget for the following fiscal year is provided to the City Council by the first meeting in May and modifying the General Fund contingency reserve requirement to remove the specific dollar amount required and to only require a four to one vote to reduce the 10% General Fund contingency reserve requirement. Finally, the proposed deletion of section 3.01.060 would remove the dated requirement that a corporate surety bond be furnished for the Finance Director. This section is unclear on whether the City is required to pay for the bond and the City’s existing insurance (which covers officers such as the Finance Director) would adequately address any issues that would arise regarding the performance of the duties of the Finance Director.
FINANCIAL ANALYSIS
The recommended action has no financial impact to the budget.
ENVIRONMENTAL ANALYSIS
The requirements of the California Environmental Quality Act ("CEQA") do not apply to the proposed action as it is not a "project" because there is no substantial evidence to show that the proposed action has the potential to result in a direct or reasonably foreseeable indirect physical change to the environment. (State CEQA Guidelines, section 15378(a). Further, this Ordinance does not qualify as a project pursuant to State CEQA Guidelines, section 15378 (b)(4) and (b)(5) as an amendment to the City’s Financia Guidelines and Budgeting Procedures is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment and it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment.
ATTACHMENTS
1. Ordinance to Amend Municipal Code Chapter 3.24 (Pgs. 4-8)
2. Resolution to Approve City Council Policy for Budget Change Request Process (Pgs. 9-15) FIRST READING OF AN ORDINANCE AMENDING CHAPTER 3.24 OF THE LAGUNA BEACH MUNICIPAL CODE REGARDING THE CITY’S FINANCIAL GUIDELINES AND BUDGETING
PROCEDURES AND APPROVAL OF BUDGET CHANGE PROCESS ADMINISTRATIVE POLICY
April 14, 2026
Submitted By: .Michelle Bannigan Approved: .David A Kiff Michelle Bannigan, Director of
Administrative Services
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Michelle Bannigan, Director of Administrative
Services
Patrick Donegan, Assistant City Attorney