City of Lathrop
Fiscal Year 2025/2026 Mid-Year Budget Review
MARCH 09, 2026
ITEM #5.4
1 Overview
◦ In June 2025, the City Council adopted the Biennial Budget for Fiscal Years 2025/26 and 2026/27.
◦ At the mid-point of the fiscal cycle for Year 1 (FY 2026), staff is providing an update to Council on the City’s current financial status. ◦ The primary focus of this report is on the General Fund, which accounts for a majority of the City’s discretionary expenditures. ◦ Items for Council review include:
◦ Amendments to Year 1 of the Biennial Budget:
◦ Program Requests
◦ New/Revised Job Descriptions
◦ Amended Grade Step Table
◦ Amended Position Control Roster
2 Mid-Year Update
◦Revenue
◦ Property tax revenues are trending higher than originally projected. ◦ Staff recommends increasing by $300k.
◦ Staff will continue monitoring revenue performance through FY 2026 and recommend additional adjustments if needed.
3 Mid-Year Update
◦ Expenditures
◦ To align expenditures with current operational needs, staff proposes an increase of $206k.
◦ $26k - Prior authorized one time increase for City Manager, City Attorney and the Police Chief contracts.
◦ $4.6k – Increase in auto repair cost for vehicles involved in accident. ◦ $48k – Vehicle purchase for ISD offset by a transfer from the Equipment Replacement Reserve.
◦ $39k – Replacement of the marque at the Community Center to be offset by a transfer from equipment replacement.
◦ $6.8k - Fleet Division to account for rising maintenance costs. ◦ $60k - Program expenditures offset my participation revenues. ◦ $10k - Rental cost associated with City sponsored events. ◦ $3.5k – Police K9 vet costs.
◦ $8k – In OT for Dell’Osso Farms services offset by revenue received. 4 Mid-Year Staffing Requests
◦ Public Works
◦ Reclass City Engineer to Public Works Director/City Engineer. ◦ Annual Cost $19k.
◦ Parks and Recreation
◦ Add 1.35 FTE Recreation Leaders
◦ Due to new insurance requirements in California related to youth sports officiating, the City must transition from using contracted officiating services to utilizing part-time City staff. ◦ This change is budget neutral, as the positions will be funded using the same funds previously allocated for contract officiating. 5 Balanced General Fund Budget
REVENUE $44.4 MILLION
Property
Tax
$9.00
20%
Sales Tax
$6.68
15%
Other Tax
$1.00
2%
Franchise
Tax
$2.45
6%
Intergoven
mental
$5.30
12%
Investment
Earnings
$1.55
4%
Other
Revenue
$4.18
9%
Indirect
Costs
$6.81
15%
Public
Safety
Transfers
$4.44
10%
Other Transfers
$2.94
7%
EXPENDITURES $44.1 MILLIONS
General
Gov't
$3.68
8%
Human
Resouces
$4.21
9%
Finance
$2.06
5%
Info Systems
$5.34
12%
Com Dev
$1.20
3%
Parks & Rec
$3.09
7% Public Safety
$18.80
43%
Public Works
$3.98
9%
Transfers
Out
$1.71
4%
6 General Fund
Summary
• Current revenue trends
in property tax seem
favorable and will be
evaluated at the end of
Year 1 (FY 2026) to
recommend additional
adjustments to
projections if needed.
• Expenditures are
project to end the year
at $47.4 million.
• The City’s Reserve
Policy has established
an acceptable reservice
balance range of 10%-
50%. Currently, the
unallocated Fund
Balance is 21% of
operating Expenses.
• Staff will continue to
update Council as
additional financial and
economic data
becomes available.
General Fund Mid-Year Request Summary
(in millions)
FY 2026
Adopted
Budget
FY 2026
Mid-Year
Requests
Begin Balance $8.7 $8.9
Revenue $43.8 $44.4
Expenditures $43.4 $44.1
Unallocated Fund Balance $9.1 $9.2
7 Notable Mid-Year Non General Fund
Program Requests
◦ Adjustments proposed to align credit card processing fees with the funds where revenues are generated.
◦ $140k – Building Fund fixed charges
◦ $95k - Water Fund fixed charges
◦ $95k – Sewer Funds fixed charges
8 Council Actions
Staff recommends the City Council:
◦ Adopt the proposed resolution amending Year 1 (FY 2026) of the adopted Biennial Budget for various funds and projects as identified.
◦ Approve New & Revised Job Descriptions
◦ Amend the City’s Grade Step Table
◦ Amend the City’s Position Control Roster
9