City of Pacifica
Fiscal Year 2025-2026
Second Quarter Financial Report
1 OVERVIEW
This Second Quarterly Financial Report is an analysis of the unaudited financial status of the City’s General Fund from July 2025 through Decembers 2025. The City of Pacifica has completed the Second Quarter of the Fiscal Year 2025-26.
The Second Quarter Financial Report will summarize the City’s General Fund and is not meant to be inclusive of all finance and accounting transactions. This report intends to provide the Council and the public with a broad overview of the City’s fiscal condition, as the General Fund is the primary operating fund of the City and is used to account for most operational activities. Information presented in this report is unaudited, and additional adjustments may occur during the mid-year and year-end processes.
GENERAL FUND
General Fund Financial Condition: With half the year complete, General Fund Revenues & Transfers In are at 47%, and General Fund Expenditures & Transfers Out are at 42% of the FY 2025-26 Budget projections. Budgeted operating and capital transfers have been recorded on a quarterly basis, such that transfer-ins are included in the department programs, and transfer-outs are included in the non-department expenditures. Hence, they are exactly at the 50% benchmark. It is worth noting that the transfer-out category increased because of the renewed funding from the General Fund to cover annual debt service after a one-year temporary relief in FY 2025. Revenues are 46% of the budget during the Second quarter due to the timing of certain key revenues such as property tax, business license taxes, franchise fees, and sales tax. The year-over-year revenue comparison for the second quarter shows a slight decrease of 2% between FY 2026 and FY 2025. The expenditures for the first half of the year for general fund represent 42% of the budget adopted.
Table 1: General Fund Quarterly Summary as of December 31, 2025 The General Fund Balance as of December 31, 2025, is estimated to be $24,899,447, based on the audited fund balance of $22,635,647 as of the end of the Fiscal Year 2024-25, and factoring in year-to-date net change of $2,263,800 in the Second quarter.
Expenditures:
Table 2 presents General Fund Expenditures by Department for Quarter 2 (Q2) of Fiscal Year (FY) 2024-25 and FY 2025- 26, alongside the adopted budget for FY 2025-26. It also includes the percentage change in expenditures between Q2 General Fund Qtr 2
FY2024-25
Qtr 2
FY2025-26
FY2025-26
Adopted
Budget
% Change
Qtr 2 FY24-25
vs
Qtr 2 FY25-26
Qtr 2
% Budget
Revenues $ 24,439,907 $ 24,065,098 $ 51,776,202 -2% 46% Transfer in 711,000 739,400 1,478,800 4% 50% 47%
Expenditures 20,168,165 20,781,409 49,729,314 3% 42%
Transfer Out 831,300 1,759,290 3,518,579 112% 50% 42%
Net Change in Fund $ 4,151,443 $ 2,263,800 $ 7,109
City of Pacifica
Fiscal Year 2025-2026
Second Quarter Financial Report
2 of both fiscal years and the percentage of the budget spent in Q2 of FY 2025-26.
Table 2: General Fund Quarterly Expenditures as of December 31, 2025 Total Q2 expenditures were higher by 7% from the previous year of $20,999,465 (FY24-25) to $22,504,698 (FY25-26). 42% of the total adopted budget ($53.2M) has been spent in Q2. This suggests spending is roughly on track if distributed evenly across the year.
All departments are on target at the end of the Second Quarter and align with expected spending patterns. The total expenditures are slightly lower than 50% of the budget because some contractual payments were accrued back to the previous fiscal year for some July and August payments to match the services rendering time.
General Government Expenditures at the end of Q2 were $3,103,871, which is about 36% of the budget. This is mostly due to delayed payments for various legal costs, slightly delayed start of the 2212 Beach Blvd site evaluation consulting work under the City Manager’s contractual services, and timing of budgeted IT equipment purchases.
Police Department Expenditures at the end of Q2 were $5,888,235, which is about 43% of the budget. The lower trend compared to last year’s Q2 is primarily attributable to lower spending in regular salaries and related budgeted retirement benefits for the patrol division due to ongoing vacancies and recruitment challenges.
Fire Department Expenditures at the end of Q2 were $3,895,247 which is about $46% of the budget. Trending lower as compared with last year Q2 of $4,416,541. Upon closer look, salaries across all divisions such as emergency services, support services and paramedic support are lower than budget mostly due to salary savings from retirement of the Deputy Fire Chief in July 2025.
Community Development Expenditures at the end of second quarter represent approximately 44% of the adopted budget, generally consistent with the expected mid-year benchmark. Minor timing differences related to the recognition of cost-reimbursable activity contribute to the variance. Compared to the same period in the prior fiscal year, Q2 expenditures reflect approximately 20% higher recorded activity, primarily attributable to increased reimbursable legal services costs.
General Fund Expenditures
by Department
Qtr 2
FY2024-25
Qtr 2
FY2025-26
FY2025-26
Adopted
Budget
% Change
Qtr 2 FY24-25
vs
Qtr 2 FY25-26
Qtr 2
% Budget
General Government $ 2,721,617 $ 3,103,871 $ 8,709,896 14% 36% Police Department 6,107,801 5,888,235 13,567,079 -4% 43% Fire Department 4,416,541 3,895,247 8,510,440 -12% 46%
Community Development 1,773,992 2,125,567 4,884,974 20% 44% Public Works 2,209,292 2,361,935 5,143,615 7% 46%
PB&R 2,748,920 2,948,014 7,267,193 7% 41%
Non-Departmental 190,001 458,540 1,646,117 141% 28%
Transfer Out 831,300 1,759,290 3,518,579 112% 50%
Total General Fund
Expenditures&TransferOut $ 20,999,465 $ 22,540,698 $ 53,247,893 7% 42% City of Pacifica
Fiscal Year 2025-2026
Second Quarter Financial Report
3 Both Public works and PB&R Expenditures at the end of Q2 are both generally aligned with the adopted budget, each slightly under the 50% mid-year benchmark. Compared to the same period in the prior fiscal year, recorded expenditures reflect a modest year-over-year increase.
The Non-departmental Expenditures at the end of Q2 are at 28% of the FY 2025-26 budget consistent with the timing of annual payments. The annual OPEB contribution in FY 2025-26 was budgeted at $283,750, and paid to the PARS fund in July, earlier than in the prior year, which reflects in the year over year higher trend.
As noted previously, transfers out are made quarterly in accordance with the adopted budget. The year-over-year increase reflects a change in funding structure: in FY 2024-25, the Debt Service Fund was fully funded from within the Debt Service Fund rather than the General Fund, providing fiscal relief and additional flexibility within the General Fund. In FY 2025-26, transfers to the Debt Service Fund have resumed from the General Fund. As of the end of the second quarter, Transfers Out are reflected at approximately 50% of the adopted budget, consistent with the quarterly transfer schedule.
Revenues:
Table 3: General Fund Quarterly Revenues as of December 31, 2025 Here are key revenue observations and highlights:
Total revenues as of the end of the second quarter are approximately 1% lower compared to the same period in the prior fiscal year, declining from $25.2 million (FY 2024-25) to $24.8 million (FY 2025-26). Year-to-date collections represent approximately 47% of the adopted annual budget of $53.3 million.
Property Tax: Property tax remains the City’s largest revenue source. The second installment for FY 2025-26 was received from the County of San Mateo in December 2025 and is reflected in the second quarter results. Year-to-date General Fund Revenues by
Type
Qtr 2
FY2024-25
Qtr 2
FY2025-26
FY2025-26
Adopted
Budget
% Change
Qtr 2 FY24-25
vs
Qtr 2 FY25-26
Qtr 2
% Budget
Property tax $ 8,532,570 $ 9,064,396 $ 17,466,700 6% 52% Sales Taxes 1,042,521 1,079,278 3,241,230 4% 33%
Measure Y 832,232 876,614 2,505,100 5% 35%
Transient Occupancy Tax 1,594,456 1,950,252 2,358,000 22% 83% Franchise Tax 273,222 435,932 1,352,550 60% 32%
Business License Tax 464,550 518,649 582,000 12% 89%
Utility Users Tax 1,375,521 1,046,786 2,870,000 -24% 36% Vehicle License Fee 3,085,670 2,952,110 5,410,902 -4% 55% Cannabis Tax 235,084 273,684 800,000 16% 34%
ERAF - 172,342 3,860,000 4%
Grants 2,692,260 1,763,057 2,831,720 -35% 62%
Investment Earning 663,134 676,392 972,100 2% 70%
Department Programs 3,648,688 3,255,605 7,525,900 -11% 43% Transfer In 711,000 739,400 1,478,800 4% 50%
Total General Fund
Revenues&TransferIn $ 25,150,907 $ 24,804,498 $ 53,255,002 -1% 47% City of Pacifica
Fiscal Year 2025-2026
Second Quarter Financial Report
4 property tax revenue represents approximately 52% of the adopted budget. Compared to the same period in the prior fiscal year, collections are approximately 6% higher, or slightly higher than the budget assumptions reflecting recent real estate market trends.
Sales Tax: As of December 31, 2025, the City has received 33% of its budgeted Sales Tax revenues. There is a twomonth lag on the receipt of sales tax revenues, and the amount shown only represents four months of receipts and is consistent with the prior year.
Measure Y: As of December 31, 2025, the City has received 35% of its budgeted Measure Y Transaction and Use Tax revenues. There is a two-month lag on the receipt of tax revenues, and the amount shown only represents four months of receipts and is consistent with the prior year.
Transient Occupancy Taxes (TOT): TOT revenues are remitted approximately 30 days after the end of each month, and revenues are not accrued at quarter‐end (as they are at the end of the fiscal year). The second quarter reflects TOT receipts for the months of July through November activity. This category includes taxes from both Hotel and ShortTerm Rental (STR) operators. This year’s was reduced to reflect anticipated impacts of the update STR ordinance. With the adoption of the revised STR ordinance, a reduction in TOT was anticipated due to the expected non-renewal and closure of a number of STR properties that could not comply with the stricter ordinance requirements. However, before accounts could be formally closed, operators were required to remit any outstanding tax liabilities. As a result, final payments, including prior-period balances, generated temporary, one-time increases in collections. The ongoing fiscal impact of reduced STR activity is expected to become more apparent in the third and fourth quarters, following completion of the renewal process in early Q3.
Other Taxes: These include Franchise Tax, Business License, Utility Users Tax, Vehicle License Fees, and Cannabis Operations Tax. Payments for Franchise Tax and Utility Users Taxes are remitted 30 days after the end of the month, and Pacific Gas & Electric (PG&E) generally submits its franchise fee payment in April, and the revenue is therefore recognized in the fourth quarter. Franchise Fees are showing 60% higher than previous quarter, as last year there were catch-up pass-through payments to Pacifica Community Television (PCT) from the prior year, reducing previous year’s revenues. The Utility Users Tax remittances are showing some delay in receipts as compared to previous year's quarter two. License Tax renewal takes place on November 1 annually, as such the majority of these revenues will be recorded in the second quarter.
Vehicle License Fee (VLF) is trending at 55% of the budget and on target. VLF remittances draw from two funding sources: ERAF (Educational Revenue Augmentation Fund) allocations, which non-basic aid school districts are entitled to, and, if necessary, property tax revenues of non-basic aid school districts. Any funds used by non-basic aid school districts for VLF purposes are reimbursed by the State. This year’s allocation represents a portion of the two year backfill payment by the State. At the mid-year budget review, staff will bring an amendment to utilize the set aside reserve since the State only funded 2/3 of the backfill payment.
Cannabis Tax shows a slight increase in comparison to the prior year’s quarter two, primarily due to timing differences in business filings. As of the second quarter, actual remittances are at 34% of the budget. Staff will continue monitoring the cannabis industry’s performance relative to budget projections, but recent reports for HdL show this tax category as continuing its downward trend year over year Statewide.
Excess ERAF: (Excess Educational Revenue Augmentation Fund). In the past few years, ERAF revenues used to be recorded in the Disaster Accounting and Housing funds. However, in FY2025-26, to help alleviate the General Fund City of Pacifica
Fiscal Year 2025-2026
Second Quarter Financial Report
5 financial strain, revenues will be recorded in General Fund according to the Council’s policy decision. These revenues are anticipated by the County Controller’s office in January and August, which will then be recorded in the third quarter and fourth quarters respectively. The current receipt of $172,342 represents 5% of reserves held from the total excess ERAF amount from three years ago.
Grants: As of the end of the second quarter, approximately 62% of the annual grant budget has been collected, primarily attributable to the Child Care Program. Increased staffing dedicated to program administration has improved the timeliness of reimbursement submissions and collections from grantors.
Investment Earnings: Year-to-date investment earnings represent approximately 70% of the adopted budget and are approximately 2% higher compared to the same period in the prior fiscal year. It should be noted that, as part of the fiscal year-end pooled interest allocation process, a portion of interest earnings will be distributed to other funds to reflect their proportional share of invested cash.
Department/Programs: This category includes building permits, engineering, and planning fees, and charges related to Parks, Beaches & Recreation programs and rentals. As of December 31, 2025, the city received 43% of budgeted revenues, which is consistent with performance at the end of the second quarter in prior years after the summer activities. Overall, permits and planning fees tend to fluctuate based on the timing of projects.
Transfer In: As of the end of the second quarter, approximately 50% of the budgeted transfers have been received, consistent with the scheduled quarterly cost recovery transfers from other funds.
SUMMARY
As of the end of the second quarter, General Fund revenues and expenditures are generally tracking consistent with adopted budget assumptions. Year-to-date operating expenditures represent approximately 42% of the adopted budget, while revenues reflect approximately 47% of budgeted amounts.
These figures are preliminary and subject to refinement as routine accounting entries continue throughout the fiscal year, particularly during the Mid-Year Budget Review slated for March 9th, and year-end closing process, which may result in adjustments to the amounts presented.
Staff will continue to monitor revenue performance, expenditure trends, and broader economic conditions, and will report any material developments to the City Council as additional information becomes available.