CITY OF MORRO BAY
Notice of Special Joint Meeting of the
City Council and Citizens Finance Advisory Committee
Agenda
Tuesday, April 21, 2026, 3:30 p.m.
Veterans Memorial Hall
209 Surf St., Morro Bay, CA
Public Participation
Public participation is offered in the following ways:
• Community members may attend the meeting in person at the Morro Bay Veterans Hall.
Alternatively, members of the public may watch the meeting and speak during general Public Comment or on a specific agenda item by logging into the Zoom webinar using the information provided below. Please use the "raise hand" feature to indicate your desire to provide public comment.
•
• Zoom webinar link: https://us02web.zoom.us/j/82429164990 Or Telephone Attendee: 1 (669) 444-9171 or 1 (669) 900-9128 or 1 (346) 248-7799; Webinar ID: 824 2916 4990. Press *9 to raise hand for public comment. •
• Meetings are also livestreamed on the City's website.
Community Members are encouraged to submit agenda correspondence via email to the City Council at [email protected] prior to the meeting. Agenda correspondence received by 10:00 a.m. on the meeting day will be posted on the City website.
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Pages
1. ESTABLISH QUORUM AND CALL TO ORDER
2. PUBLIC COMMENT FOR ITEMS ON THE AGENDA
3. SPECIAL MEETING AGENDA ITEMS
3.a Review 2026 Workplan: 1
• Subcommittee Update - Revenue Policy
• Subcommittee Update - Measure Q/E Accounting and Reporting Recommended Action
Staff recommends the City Council and Citizens Oversight/Finance Advisory Committee (CFAC):
1. Receive and file review of City Council-assigned 2026 Workplan;
2. Discuss potential additional assignments.
3.b Fiscal Year 2026-27 Measure Q/E Budget Requests 6
Recommended Action
Staff recommends the City Council and Citizens Oversight/Finance Advisory Committee review Fiscal Year (FY) 2026-27 Measure Q/E Budget Requests and provide feedback to staff.
4. ADJOURNMENT
This agenda is subject to amendment up to 24 hours prior to the date and time set for the meeting. Please refer to the agenda posted at City Hall, 595 Harbor Street, Morro Bay, CA 93442 for any revisions or call the Clerk's office at (805) 772-6205 for further information.
Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packet are available for public inspection upon request by calling the City Clerk's office at (805) 772-6205.
In compliance with the Americans Disability Act, if you need special assistance to participate in a City meeting, please contact the Clerk's office 24 hours prior to the meeting to insure reasonable arrangements can be made to provide accessibility to the meeting.
Prepared By: EC Dept Review: __EC______
City Manager Review: JC City Attorney Review: _______
Staff Report
TO: CFAC Chair and Committee Members DATE: April 14, 2026 FROM: John Craig, City Manager
Emily Conrad, Finance Director
SUBJECT: Review 2026 Workplan:
Subcommittee Update – Revenue Policy
Subcommittee Update – Measure Q/E Accounting and Reporting
RECOMMENDED ACTION
Staff recommends the City Council and Citizens Oversight/Finance Advisory Committee (CFAC):
1. Receive and file review of City Council-assigned 2026 Workplan;
2. Discuss potential additional assignments.
BACKGROUND
Consistent with the Advisory Body Handbook, CFAC’s purpose is to provide citizen input to the City Council regarding specified financial policy issues such as City budgets or other items designated by City Council. Additionally, the Committee’s role is to help promote citizen participation with, and understanding of, governmental financial information and process. The CFAC’s duties include special financial projects, as directed by the City Council, City Manager, or City Treasurer.
On October 21, 2025, a joint City Council-CFAC meeting was held in lieu of the regular CFAC meeting. At this meeting, potential special assignments for the committee were discussed. Based on that discussion, CFAC’s 2026 Workplan was determined.
DISCUSSION
Following a thorough discussion, City Council, CFAC, and staff agreed on two special assignments for 2026:
Revenue Policy Review and Revision
Measure Q/E Accounting and Reporting
At the regular meeting on February 17, 2026, CFAC established two subcommittees, one for each of the special assignments.
Members Branin and Beckman were appointed to the subcommittee to review the revenue policy and make recommendations to City Council. The initial task was identified as meeting with City Council members to identify the scope of the issue and then develop and bring a work program and timeline back to the next available meeting for CFAC review and adoption.
Chair Peck and Member Johnson were appointed to the subcommittee to review and make AGENDA NO: 3a
MEETING DATE: April 21, 2026
recommendations to simplify Measure Q/E accounting and reporting. The initial task was identified as meeting with City staff to develop deliverables and timeline.
ATTACHMENT(S)
1. Subcommittee Workplan for Review of Measure Q/E Accounting & Reporting
Work Program for Allocation/Expenditure Plan
In October, the City Council asked the CFAC to consider an alternative method of allocating Q/E revenues to simplify the accounting. In January City staff presented one option for simplifying the accounting and allocation of Q/E funds which was based on the number of positions. Following that meeting in late January, in CFAC’s annual report to Council, CFAC expressed its support for any efforts to be more cost effective in the administration of the Q/E revenues, subject to the requirement that any modification of the accounting enable the City to efficiently report the expenditures, uses and activities funded from the Q/E revenues received in the current and prior fiscal years.
CFAC stated that a longer term “allocation plan” is a good idea. An allocation methodology should be developed based on a historical review of Q/E expenditures, Q/E revenue projections, projections of future departmental and capital needs, and robust public participation and CFAC review. It also recommended that this change result in a more formalized and consistent method of reporting “activities funded” from Q/E funds, and that the annual reports be more simplified, approachable and transparent presentation of the material to the public.
A multi-year allocation plan would enable the city to anticipate and budget for activities that need to spread over multiple years, identify changes in departmental needs, identify capital improvements that would be and won’t be funded by this revenue source, and develop a consensus around the current and future use of such funds. It would also address authorized activities that have not been funded in the past.
Virtually all cities in the County now have some form of special sales tax measures, and there are varying levels of longer-term planning, various types of reporting and various levels of “oversight”. There are undoubtedly best practices that can be adopted from others.
Also, as the history and context of Measure Q and E get farther away in the rearview mirror, there is a varying degree of institutional knowledge about what the funds “can” and “can’t “ be used for, and the legislative intent. Are there two measures (Q and E), or one measure (E replaced Q)? Are portion of the funds from the Q 0.5% to be applied to Q activities and the 1% from Measure E to be applied to Measure E activities, is there one composite list of activities? This work effort can review that history and answer these questions.
The final product of the effort would be a multi-year “allocation plan” or “expenditure plan” for Q/E funds that would be categorized by the activities authorized by the voters when Q and E were approved. A multi-year allocation plan would take
some concentrated effort now (including this study and report), but would simplify reporting and accounting during the term of the plan.
As with the Revenue Policy Review, this effort will require the formation of a subcommittee to work between the meetings and develop work products.
Suggested Work Program
1. Meet with staff to review “accounting” and reporting issues. Identify current systems used to track activities, and potential systems needed.
2. Review legislative history of Q and E, including adopted ordinances and resolutions directing how the funds are to be used.
3. Summarize Q and E expenditures by activity since adoption of Measure Q to the current year. Identify percentages of Q/E funds spent on each activity and note changes and trends. Identify areas where there has been limited expenditures and activities in categories not explicitly set forth in the ballot measures.
4. Identify the types of expenditures that fall into each defined activity.
5. Identify trends and needs for each activity by department; recommend initial allocations by activity and by department. Identify extent of revenues to be programmed over the plan term, the amount of “contingency” to be reserved to be allocated to special needs, and the amount and type of capital to be funded from Q/E.
6. Identify methods to track usage of Q and E revenues when expensed or budgeted over multiple years.
7. Complete a report for the City Council.
Timeline and Schedule
City staff has expressed some urgency of completing this task to possibly apply it to the 2026/27 budget document. That seems unlikely, given the extent of staff help and support that will be necessary, and the need to go through this in a deliberative manner with appropriate opportunities for departmental comment, and for public input. The following is recommended for Committee review and comment:
May Meeting (May 19th; report due for packet on May 13th)
1. Meet with staff to review “accounting” and reporting issues. Identify current systems used to track activities, and potential systems needed.
2. Review legislative history of Q and E, including adopted ordinances and resolutions directing how the funds are to be used.
3. Review oversight methods used by other communities.
4. Identify the types of expenditures that fall into each defined activity.
5. Summarize Q and E expenditures by activity since adoption of Measure Q to the current year. Identify percentages of Q/E funds spent on each activity and note changes and trends. Identify areas where there has been limited expenditures and activities in categories not explicitly set forth in the ballot measures.
August Meeting (August 18th; report due for packet on August 12th)
1. Identify trends and needs for each activity by department; recommend initial allocations by activity and by department. Identify extent of revenues to be programmed over the plan term, the amount of “contingency” to be reserved to be allocated to special needs, and the amount and type of capital to be funded from Q/E.
2. Identify methods to track usage of Q and E revenues when expensed or budgeted over multiple years.
3. Public review and comment on draft allocations and methodology.
October Meeting (October 20th; agenda report due October 14th)
1. Identify final recommended trends and needs for each activity by department; recommend allocations by activity and by department. Identify extent of revenues to be programmed over the plan term, the amount of “contingency” to be reserved to be allocated to special needs, and the amount and type of capital to be funded from Q/E.
2. Identify methods to track usage of Q and E revenues when expensed or budgeted over multiple years. Need for additional systems.
3. Recommend annual, simplified reporting format.
4. Complete report for the City Council.
Prepared By: EC Dept Review: ___EC_____
City Manager Review: JC City Attorney Review: _______
Staff Report
TO: CFAC Chair and Committee Members DATE: April 16, 2026 FROM: John Craig, City Manager
Emily Conrad, Finance Director
SUBJECT: Fiscal Year 2026-27 Measure Q/E Budget Requests
RECOMMENDED ACTION
Staff recommends the City Council and Citizens Oversight/Finance Advisory Committee review Fiscal Year (FY) 2026-27 Measure Q/E Budget Requests and provide feedback to staff.
BACKGROUND
The Citizens’ Oversight Committee was established in accordance with the passage of Measures Q and E. The responsibilities of the committee are to review revenues and expenditures of Measure Q/E semi-annually to ensure expenditures align with the activities intended to be funded with the specific revenue source, and to present findings and conclusions to City Council within eight months of fiscal year end.
The Citizens’ Oversight Committee also acts in the capacity of a Citizens’ Finance Advisory Committee (CFAC) and as such, per the scope of work outlined in the Advisory Body Handbook (page 35), the City Council invites CFAC input on the Measure Q/E Proposed Budget and the broader Citywide budget as time permits.
At the February 24, 2026 City Council meeting, City Council requested a joint City CouncilCFAC meeting to be held in April 2026 to review budget requests and potentially make changes to those requests, as this timeline would allow staff the time to make adjustments to the draft budget prior to the annual budget workshop in May. Subsequent discussions prior to the meeting date clarified the focus was Measure Q/E budget requests.
On April 13, 2021 by 5-0 vote, City Council directed staff to allocate Measure Q/E revenues to four principles (activities):
1. Maintain public safety services by funding staff positions that are most closely aligned with the purposes of the Measures Q and E. Expenses include costs associated with Morro Bay Fire Department, Morro Bay Police Department, and Morro Bay Harbor Department personnel and equipment, in addition to the Fire Headquarter Debt service and the Fire engine loan repayment.
AGENDA NO: 3.b
MEETING DATE: April 21, 2026
2. Maintain or enhance cleanliness and safety of public space such as parks, waterfront, and the beach by funding personnel, supplies, expenses, and equipment to support City operations in departments including Public Works Consolidated Maintenance and Harbor Department.
3. Invest in infrastructure and equipment such as street paving, storm drains, and vehicle replacements that support City services. This priority may include increasing capacity to implement the backlog of unfunded capital projects.
4. Ensure financial health of the City by maintaining appropriate reserves to protect against economic downturns, natural/health emergencies and other unforeseen challenges or opportunities.
Budget requests have been categorized for presentation according to the above four principles/activities and are presented in the following section.
DISCUSSION
The Measure Q/E Fund's proposed revenue budget is $4,505,000 for FY 2026-27, consistent with the actual tax revenues received in FY 2023-24 and FY 2024-25 and tax revenues projected for FY 2025-26. There is some indication revenues could exceed this estimate, however, in consideration of current economic uncertainty and prior three years of actual receipts, staff finds it prudent to keep estimates flat at this time.
Measure Q/E budget requests total $5,211,787 for FY 2026-27.
1. Maintain Public Safety Services $2,546,642
Maintain 24/7 Fire Department and Paramedic Services $1,021,707 Maintain 24/7 Police Department Services $991,936
Maintain 24/7 911 Emergency Response $533,000
2. Maintain or Enhance Cleanliness and Safety of Public Spaces $988,922 Public Space Cleanliness and Facility Maintenance $630,256 Waterfront Safety $173,666
Waterfront Maintenance $185,000
3. Invest in Infrastructure and Equipment $1,676,223
Infrastructure Maintenance $1,358,536
Equipment $317,687
TOTAL: $5,211,787
The FY 2026-27 Measure Q/E budget requests outlined above can be viewed in Attachment
1. Spending at this level results in a structurally unbalanced budget, meaning anticipated revenues are insufficient to fund budget requests and utilization of remaining prior year revenues, or fund balance, in the amount of $706,787, would be required. At the time of FY 2025-26 budget adoption, the ending fund balance at June 30, 2026 was estimated to be $1,548,149, indicating the $706,787 is available for budgeting in FY 2026-27. An alternative would be to reduce spending for FY 2026-27 down to the anticipated revenue amount.
ATTACHMENT(S)
1. FY 2026-27 Measure Q/E Budget Requests
2,546,642
Maintain 24/7 Fire Department & Paramedic Services
Fire Personnel 1,021,707
Maintain 24/7 Police Department Services
Police Personnel 817,069
Saftey Equipment Upkeep 52,487
Crime Reporting and Communications Software 46,220
County Contributions to Community Safety Services 76,160 Maintain 24/7 911 Emergency Response
Dispatch Services 533,000
988,922
Public Space Cleanliness & Facility Maintenance
Maintenance Personnel 380,256
Street Sweeping 125,000
Facility Maintenance 25,000
Cerrrito Peak Fire Risk Reduction 100,000
Waterfront Safety
Harbor Lifeguard Program 87,995
Harbor Patrol Reserve Program 85,671
Waterfront Maintenance
Maintenance of Waterfront Areas 40,000
Disposal Contract 145,000
1,676,223
Maintain and Replace Infrastructure and Equipment
Project Management: Engineering Personnel 158,536
Pavement Management Contribution 1,000,000
Street Repair 200,000
Infrastructure Maintenance
Police Radio Communications Upgrade Contribution 317,687 -
No requests
5,211,787
FY 2026-27 MEASURE Q/E BUDGET REQUESTS
TOTAL
Maintain Financial Health of the City
Invest in Infrastructure and Equipment
Maintain or Enhance Cleanliness and Safety of Public Spaces Maintain Public Safety Services