FY 2025-26 First Quarter Operating Budget Review.pdf — Moreno Valley City Council, November 18, 2025

1 City of Moreno Valley
Fiscal Year 2025/26
First Quarter Operating Budget Review
TO:

FROM:

DATE:

Mayor and City Council
Dena Heald, Chief Financial Officer/City Treasurer
November 18, 2025

INTRODUCTION
On May 6, 2025, the City Council adopted the Two-Year Operating Budget for Fiscal Years (FY) 2025/26 – 2026/27. During the two-year budget period, the City Council will be kept apprised of the City’s financial condition through the process of First Quarter, Mid-Year, and Third Quarter Reviews. This ongoing process ensures a forum to look at expenditure and revenue deviations from the estimates made in the budget document. Additionally, any significant changes in projected revenue or unanticipated expenditure that may occur will be shared with the City Council.

This report provides a review of the unaudited financial results for the First Quarter of FY 2025/26 (July 2025 – September 2025, 25% of the fiscal year).

First Quarter Financial Summary FY 2025/26 2

CITYWIDE OPERATING EXPENDITURE SUMMARY
The following table contains a summary of the adopted budget, amended budget and expenditures through the First Quarter. The totals represent each major fund type and component unit of the City.

Table 1. Citywide Operating Expenditures

Actions taken by the City Council after the May 6, 2025 adoption of the two-year budget and included in the Amended Budget are:
 Throughout the fiscal year, there are also budget amendments to reflect the acceptance of grants and adjustments to contractual services and material/supplies. The individual amendments are reviewed as part of separate City Council agenda items.  Much of this First Quarter update will focus on the General Fund, as it supports all basic services provided to City residents. Highlights for other key component funds will be discussed at a summary level as well.

FY 2025/26 Adopted Budget FY 2025/26 Amended Budget Actuals as of 09/30/25 (unaudited) % of Amended BudgetFund/Component Unit General Fund $ 179,170,713 $ 180,091,999 $ 37,857,589 21.0%Measure U 25,796,078 25,796,078 203,772 0.8%Community Services District (CSD) 29,269,773 29,576,747 6,434,380 21.8%Successor Agency 3,586,544 3,586,544 781,014 21.8%Housing Fund 266,750 1,176,750 68,755 5.8%Special Revenue Funds 48,094,713 87,299,303 18,496,459 21.2%Capital Projects Funds 13,831,000 76,297,015 4,324,271 5.7%Electric Utility Funds 87,933,297 114,658,101 15,392,171 13.4%Internal Service Funds 27,299,221 30,234,863 13,629,672 45.1%Debt Service Funds 3,549,303 3,549,303 1,789 0.1%Total 418,797,392$ 552,266,703$ 97,189,872$ 17.6% First Quarter Financial Summary FY 2025/26 3

GENERAL FUND OPERATING
Table 2. General Fund Operations

FY 2025/26 A dopted Budget FY 2025/26 Amended Budget Actuals as of 09/30/25 (unaudited) % of A mended BudgetRevenues:Taxes:Property Tax $ 36,000,000 $ 36,000,000 $ 888,972 2.5%Property Tax in-lieu 34,321,793 34,321,793 - 0.0%Utility Users Tax 20,000,000 20,000,000 4,354,815 21.8%Sales Tax 60,546,078 60,546,078 5,235,833 8.6%Other Taxes 22,000,000 22,000,000 2,232,016 10.1%Licenses & Permits 6,552,550 6,552,550 1,171,498 17.9%Intergovernmental 390,000 390,000 488,818 125.3%Charges for Services 15,699,054 15,699,054 4,213,112 26.8%Use of Money & Property 7,533,000 7,533,000 3,236,771 43.0%Fines & Forfeitures 544,500 544,500 62,622 11.5%Miscellaneous 168,000 168,000 39,302 23.4%Total Revenues $ 203,754,975 $ 203,754,975 $ 21,923,759 10.8%Expenditures:Personnel Services $ 38,648,804 $ 38,648,804 8,504,778$ 22.0%Contractual Services 148,064,761 148,130,83925,687,075 17.3%Material & Supplies7,183,533 7,202,071514,886 7.1%General Government - - - -Debt Service - - - -Fixed Charges - - - -Fixed Charges5,447,166 5,447,1661,292,470 23.7%Fixed Assets 1,200,000 2,036,670 - 0.0%Total Expenditures $ 200,544,264 $ 201,465,550 $ 35,999,209 17.9%Excess (Deficiency) of RevenuesOver (Under) Expenditures $ 3,210,711 $ 2,289,425 $ (14,075,450)Transfers:Transfers In $ 418,816 $ 418,816 $ - 0.0%Transfers Out4,422,527 4,422,527 2,062,153 46.6%Net Transfers $ (4,003,711) $ (4,003,711) $ (2,062,153)Total Revenues & Transfers In $ 204,173,791 $ 204,173,791 $ 21,923,759 10.7%Total Expenditures & Transfers Out204,166,791 205,888,077 38,061,361 18.5%Net Change of Fund Balance $ 7,000 $ (1,714,286) $ (16,137,602) First Quarter Financial Summary FY 2025/26 4
Fund Operating Revenues

The General Fund is comprised of several revenue types. However, the main sources include property tax, sales tax, and utility user’s tax. Each of these is affected by different economic activity cycles and pressures. Miscellaneous revenue consists of claims, donations, business license report fees, business fees for events, etc.

Table 3. General Fund Operating Revenues

Property taxes were budgeted to increase by 31% from the FY 2024/25 Amended Budget. The annual schedule of property tax payments from the County of Riverside will provide payments to the City based on the following estimated schedule:

Secured Property Tax Payment Dates
Settlement 1 January
Settlement 2 May
Settlement 3 August
Teeter Settlement October

Based on historical averages of actual receipts, the City is estimated to receive less than 1% of the budgeted property tax revenue through the First Quarter. The City has currently received 1% through the First Quarter. Property taxes will continue to be monitored as property valuations may adjust throughout the year based on property sales and assessment appeals filed with the County.

Note: Property tax revenues are generally not received during the first quarter.

First Quarter Financial Summary FY 2025/26 6
Sales Taxes

Sales tax collections for FY 2025/26 are projected to increase by 60% compared to the FY 2024/25 Amended Budget, following the voter-approved Measure U—Moreno Valley Essential Services Reauthorization Measure. Passed on November 5, 2024, Measure U authorized a one-cent (1¢) increase in the local sales tax rate, raising it from 7.75% to 8.75%, effective April 1, 2025.

Funding from Measure U is prioritized to sustain and enhance essential public services, to include Emergency response times (911), crime prevention and neighborhood policing, fire protection and service levels, homelessness intervention, street and pothole repairs, clean and safe public spaces, business retention, and general government operations.

Historically, the City has received approximately 10% of budgeted sales tax revenue by the end of the first quarter. The City currently received 5% through First Quarter. Ongoing analysis of sales tax receipts will inform Council of any future budgetary changes associated with Measure U.

Note: For FY 2017/18, the reversal of revenues accrued to the prior fiscal year in accordance with the Government Accounting Standards Board (GASB) did not occur until the second quarter.

First Quarter Financial Summary FY 2025/26 7
Utility Users Tax Utility

Utility Users Tax were budgeted to increase by 11% as compared to FY 2024/25 Amended Budget. This projection is primarily due to competitive forces within the communications markets.

Based on historical averages of actual receipts, the City is estimated to receive 21% of the budgeted utility users tax revenue through the First Quarter. The City has currently received 22% through the First Quarter.

First Quarter Financial Summary FY 2025/26 8
Other Taxes

Other taxes are primarily composed of Business Gross Receipts, Transient Occupancy Tax, Documentary Transfer Tax, and Franchise Fees. Collectively, other taxes were budgeted to increase 10% from the FY 2024/25 Amended Budget.

Based on historical averages of actual receipts, the City is expected to receive 11% of the budgeted Other Taxes revenue through First Quarter. The City has currently received 10% through the First Quarter.

First Quarter Financial Summary FY 2025/26 9
Licenses & Permits

Licenses & Permits are primarily composed of Business Permits, to include Cannabis Business Permits, as well as Animal Licenses, Building, Electrical, Mechanical, Plumbing and other permits.

Collectively, Licenses & Permits were conservatively budgeted to increase by 16% as compared to the FY 2024/25 Amended Budget.

Based on historical averages of actual receipts, the City is expected to receive 24% of the budgeted Licenses & Permits revenue through the First Quarter. The City has received 18% through the First Quarter. The collection rate is related primarily to building and business license permit activities.

Chart 5. General Fund First Quarter Revenue Trend - Licenses & First Quarter Financial Summary FY 2025/26 10
Charges for Services

Charges for services are primarily composed of Plan Check Fees, Inspection Fees, Administrative Charges to other funds, and Parking Control Fines. Collectively, Charges for Services were conservatively budgeted to increase by 8 % as compared to the FY 2024/25 Amended Budget.

Based on historical averages of actual receipts, the City is expected to receive 27% of the budgeted Charges for Services revenue through First Quarter. The City has currently received 27% through the First Quarter.

Chart 6. General Fund First Quarter Revenue Trend – Charges for Services First Quarter Financial Summary FY 2025/26 11
Use of Money and Property
Investment income continues to remain low due to extremely low rates of return for fixed income investments but have increased over the last year due to actions taken by the Federal Open Market s Committee (FOMC). The investments achieved a Yield to Maturity (YTM) for September 2025 of 4.273%. In addition, the City maintained funds in the State Local Agency Investment Fund Pool (LAIF) with a YTM of 4.212%. LAIF is realizing a slight investment decrease based on the Federal Funds target rate increase as stated in the September FOMC meeting. Reflecting a reassessment of risk balance and in pursuit of its policy goals, the FOMC opted to lower the federal funds rate by .25% to 4.00–4.25%. Staff will continue to monitor closely to ensure we maximize our investment income going forward. * Federal Reserve Board - Federal Reserve issues FOMC statement General Fund Expenditures
Expenditures are being spent in-line with prior year expenditures. Each Department’s activities will be monitored throughout the year as they may be impacted by different operational activities and project timelines.

Table 4. General Fund Expenditures
FY 2025/26
Adopted Budget
FY 2025/26
Amended Budget
Actuals as of
09/30/25
(unaudited)
% of A mended
Budget
Department
City Council $ 1,154,214 $ 1,161,642 $ 211,539 18.2% City Clerk 1,415,128 1,415,128 189,133 13.4%
City Manager 14,679,197 14,489,354 4,004,232 27.6%
City Attorney 2,083,694 2,083,694 179,270 8.6%
Community Development 17,810,499 17,810,499 3,360,623 18.9% Economic Development 3,491,219 3,318,047 431,058 13.0% Financial & Management Services 9,784,806 10,147,821 1,764,940 17.4% Human Resources 4,160,174 4,160,174 616,576 14.8%
Public Works 20,135,879 21,031,199 2,624,900 12.5%
Non-Departmental 2,044,289 2,044,289 2,630,373 128.7%
Non-Public Safety Subtotal $ 76,759,099 $ 77,661,847 $ 16,012,645 20.6% Public Safety
Police $ 86,874,769 $ 86,893,307 $ 14,266,393 16.4% Fire 41,332,923 41,332,923 7,782,323 18.8%
Public Safety Subtotal $ 128,207,692 $ 128,226,230 $ 22,048,716 17.2% Total $ 204,166,791 $ 205,888,077 $ 38,061,361
First Quarter Financial Summary FY 2025/26 12

OTHER KEY FUNDS
The following summaries describe other major funds in the City.

Moreno Valley Community Services District

The Moreno Valley Community Services District (CSD) was formed by the voters in 1984 to collect fees and certain taxes to provide an array of services including parks, recreation and community services, streetlights, landscaping and ongoing maintenance. The CSD provides these services through separate “zones” that define the services that are provided.

For certain zones, the primary revenue source used to provide services to properties is parcel fees or taxes levied on properties via their annual tax bill. Proposition 218, passed by California voters in November 1996, and has posed a serious challenge to managing the future operation of the CSD zones. Prop. 218 requires any revenue increase to be addressed through a voting process by affected property owners. For the period following the initial implementation of Prop. 218, the CSD was successful in receiving approval for some new or increased revenues. There were also revenue increases due to the growth of developed parcels within the zones.

Table 5. CSD Operations

FY 2025/26 Adopted Budget FY 2025/26 Amended Budget Actuals as of 09/30/25 (unaudited) % of Amended BudgetRevenues:Taxes:Property Tax $ 6,694,252 $ 6,694,252 $ 62 0.0%Other Taxes 7,741,645 7,741,645 - 0.0%Charges for Services6,954,834 6,954,834 321,705 4.6%Use of Money & Property1,292,001 1,292,001 306,014 23.7%Fines & Forfeitures3,500 3,500 1,063 30.4%Miscellaneous16,180 16,180 3,563 22.0%Transfers In2,301,203 2,301,203 430,406 18.7%Total Revenues $ 25,003,615 $ 25,003,615 $ 1,062,813 4.3%Expenditures:Library Services Fund (5010) $ 4,530,031 $ 4,530,031 $ 935,220 20.6%Zone A Parks Fund (5011)13,296,555 13,296,555 3,430,966 25.8%LMD 2014-01 Residential Street Lighting Fund (5012)1,588,5491,588,549 294,226 18.5%Zone C Arterial Street Lighting Fund (5110)912,213 912,213 197,734 21.7%Zone D Standard Landscaping Fund (5111)1,715,790 1,715,790 229,143 13.4%Zone E Extensive Landscaping Fund (5013)699,906 699,906 56,288 8.0%5014 LMD 2014-023,437,472 3,437,472 489,162 14.2%5016 CFD 2021-01 Parks Fac Maint 570,500 570,500 52,618 9.2%Zone M Median Fund (5112)476,335 476,335 50,958 10.7%CFD No. 1 (5113)1,965,636 2,272,610 688,397 30.3%Zone S Financial & Management Svcs (5114) 76,786 76,786 9,669 12.6%Total Expenditures $ 29,269,773 $ 29,576,747 $ 6,434,380 21.8%Net Change orAdopted Use of Fund Balance (4,266,158)$ (4,573,132)$ (5,371,567)$ First Quarter Financial Summary FY 2025/26 13
Community Services District Zone A – Parks & Community Services The largest Zone within the CSD is Zone A. It accounts for the administration and maintenance of the Parks & Community Services facilities and programs. Funding sources for these services come from a combination of property taxes, fees for service, and smaller amounts from other City funds.

Table 6. CSD Zone A Operations

FY 2025/26 A dopted Budget FY 2025/26 Amended Budget Actuals as of 09/30/25 (unaudited) % of A mended BudgetRevenues:Taxes:Property Tax $ 2,979,205 $ 2,979,205 $ 32 0%Other Taxes 5,282,900 5,282,900 - 0.0%Charges for Services 1,350,234 1,350,234 304,141 22.5%Use of Money & Property 1,283,001 1,283,001 221,029 17.2%Miscellaneous 4,650 4,650 1,338 28.8%Total Revenues $ 10,899,990 $ 10,899,990 $ 526,540 4.8%Expenditures:35010 Parks & Comm Svcs - Admin $ 1,216,179 $ 1,216,179 $ 223,722 18.4%35210 Park Maintenance - General5,450,540 5,450,540 1,351,519 24.8%35211 Contract Park Maintenance490,295 490,295 117,161 23.9%35213 Golf Course Program559,845 559,845 151,205 27.0%35214 Parks Projects265,097 265,097 57,990 21.9%35310 Senior Program851,210 851,210 215,069 25.3%35311 Community Services - - (204) 0.0%35312 Community Events1,171,411 1,171,411 399,329 34.1%35313 Conf & Rec Cntr597,448 597,448 137,384 23.0%35314 Conf & Rec Cntr - Banquet273,240 273,240 60,814 22.3%35315 Recreation Programs1,514,069 1,514,069 380,522 25.1%35318 Sports Programs786,548 786,548 183,010 23.3%35319 Towngate Community Center37,083 37,083 4,456 12.0%35320 Amphitheater 7,940.00 7,940 241 3.0%35321 March Annex 5,650.00 5,650 5,779 102.3%35324 Aquatics Programs 70,000.00 70,000 40,981 58.5%95011 Non-Dept Zone A Parks - - 101,989 0.0%Total Expenditures $ 13,296,555 $ 13,296,555 $ 3,430,966 25.8%Net Change orA dopted Use of Fund Balance (2,396,565)$ (2,396,565)$ (2,904,426)$ First Quarter Financial Summary FY 2025/26 14
Electric Utility

The Moreno Valley Utility (MVU) manages the operation, maintenance, and business planning of the City’s electric utility. MVU’s basic purpose is to purchase and distribute electricity to customers in newly developed areas of the City. The City began serving new customers in February 2004, and now serves 9,551 customers. As it reaches fiscal and operational maturity, MVU will continue to be a key component of the City’s economic development strategy. The City Council has established special tiered rates for electric utility customers based upon factors such as the number of jobs created.

The main source of revenue for this fund is derived from charges for services. The customer base includes residential, commercial, and industrial customers. The growth in the customer base will continue to provide for the ability to create rate stabilization and replacement reserve funding.

Table 7. MVU Operations

*MVU’s revenues and expenses will fluctuate annually based on energy demand.

FY 2025/26 Adopted Budget FY 2025/26 A mended Budget Actuals as of 09/30/25 (unaudited) % of Amended BudgetRevenues:Taxes:Charges for Services $ 57,409,981 $ 57,409,981 21,819,806 38.0%Use of Money & Property1,607,000 1,607,000 942,507 58.7%Miscellaneous100,000 100,000 130,302 130.3%Total Revenues $ 59,116,981 $ 59,116,981 $ 22,892,614 38.7%Expenditures:45510 Electric Utility - General $ 53,411,908 $ 53,411,908 $ 10,999,299 20.6%45511 Public Purpose Program3,346,196 3,346,196 228,762 6.8%45512 SCE Served Street Lights750,000 750,000 194,339 25.9%80005 CIP - Electric Utility 24,818,501 51,543,305 3,417,059 6.6%96030 Non-Dept 2005 Lease Revenue Bonds3,857,4773,857,477 767,955 19.9%96030 Non-Dept 2005 Lease Revenue Bonds200,000200,000 - 0.0%96036 Non-Dept 2024 Refund 2014 LRB104,815104,815 (17,540)-16.7%96041 Non-Dept 2021 LRB Refinance 609,785 609,785 (100,722) -16.5%96051 Non-Dept 2021 Streetlight Refin. 185,410 185,410 (15,704) -8.5%96060 Non-Dept 2019 Taxable LRB 649,205 649,205 (104,680) -16.1%Total Expenditures $ 87,933,297 $ 114,658,101 $ 15,392,171 13.4%Net Change orA dopted Use of Fund Balance $ (28,816,316) $ (55,541,120) $ 7,500,443 First Quarter Financial Summary FY 2025/26 15

SUMMARY
The City of Moreno Valley has experienced certain levels of growth and continued to maintain a structurally balanced Budget without the use of reserves.

The economic climate is ever changing and for these reasons the City must remain optimistically cautious and only increase revenues when they are received. Staff will continue to monitor and request quarterly revenue adjustments based on this approach. These revenue adjustments will be offset by replenishing our expenditure levels accordingly.

Moreno Valley City CouncilNovember 18, 2025

Moreno Valley City Council
November 18, 2025