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MIDYEAR BUDGET REPORT
FY 2024-25
February 25, 2025
Midyear Status Review
The Midyear Budget Report presents a high-level
analysis of year-to-date budget-to-actuals for the
major funds: General Fund, Measure Q/E, Water,
Sewer, and Harbor.
The report shows that current year revenues and
expenditures are on track; however, the long-term
fiscal forecasts suggest that Council will face
challenging decisions in the years ahead as current
revenue projections do not cover the full cost of
ongoing capital needs.
Major Revenue Sources
Property tax growth is holding at
approximately 4% per year.
TOT growth has flattened with less than 1%
growth over prior year. Visit Morro Bay is
optimistic about the next two quarters.
Sales tax has flattened with less than 1%
growth over prior year.
Property tax
Transient
Occupancy Tax
Sales Tax
27%
23%
13%
Indicates percent of General Fund revenues
Major Expenditures
The Fire Department is estimating
approximately $0.75 million of fully
reimbursable expenditures.
Personnel costs have risen in
accordance with Council-approved
MOUs with represented and nonrepresented employee groups.
The City’s Section 115 pension trust
should help keep annual UAL payments
(distributed across several funds) below
$3.4 million.
Significant unfunded capital needs
remain a high priority for the City.
Mutual Aid
Activity
Personnel Costs
Pension Liability
Payments
Unfunded
Capital Needs
General Fund Midyear Actuals & FYE Estimates
For the reporting period of July 1, 2024, through January 31, 2025, the City has received 69% of budgeted General Fund revenues and spent 66% of its expenditure budget.
GF Key Revenue Sources
GF Expenses by Type
Personnel Changes – Business License/TOT Admin
Full-Time Staffing Part-Time Staffing
Summary of General Fund Midyear Impact
Measure Q/E Fund
Revenue estimates are higher than budget but lower than FY 2023-24 actuals, which is consistent with recent trends. Sales tax revenue growth is anticipated to remain flat.
Operating expenditures are on track at 52% of budget.
Fund revenues are slightly low, given that they represent five months of sales tax collected due to the two-month lag in receipts.
Measure E Expenses by Department
CFAC Feedback Regarding the Midyear Report
• CFAC did not recommend approving the requested amendment for Harbor Patrol Reserve Part-time Pay. They recommended funding this request from the Harbor Operating Fund or using projected savings from the Harbor Lifeguard Part-Time Pay account in Q/E.
• CFAC recommended going “back to basics” for FY 2025-26 budget development and funding police, fire, pavement, storm drains, and youth & parks expenditures.
10-year Fiscal Forecasts: Assumptions
• Assumptions have been refined to align more closely with actual revenue and expenditure trends in recent years.
• Current Services Revenues/Other O&M Expenditures: 3% CPI • Sales Tax: 2% near-term; 3% long-term
• Property Tax: 4% per SLO Co estimates
• Harbor Lease: YE estimates adj to reflect recent actuals, then 2-3% • Personnel (Operational): 6-8% increases per MOUs, then modest COLA
• Personnel (Pension Liability): Normal Costs 1%; UAL 13% near-term 10-year Fiscal Forecasts:
Scenarios and Action Items
• Tenuously balanced operating budget throughout the forecast • Insufficient operating surplus to fully fund capital needs • Three scenarios:
• Using Recommended Capital Spending Levels
• Adjusted to Comply with Current City Council Reserve Policy • Adjusted to Comply with a 20% Reserve Minimum
• Staff recommends the City Council direct the Finance Department to develop a Long-Term Financial Plan to generate strategic options for responding to the capital funding shortage.
Q&A