City of Pacifica
Fiscal Year 2025‐26
ThirdQuarter Financial Report
1 OVERVIEW
This Third Quarterly Financial Report is an analysis of the unaudited financial status of the City’s General Fund from July 1, 2025, through March 31, 2026. The City of Pacifica has completed the Third Quarter of the Fiscal Year 2025‐26. The Third 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 City’s primary operating fund and is used to account for most operational activities. Information presented in this report is unaudited, and additional adjustments may occur during year-end process.
GENERAL FUND
General Fund Financial Condition: This first table provides a snapshot of the General Fund Revenues and Expenditures by for Q3 FY 2024-25 as compared to Q3 FY 2025-26, comparing the quarter-over-quarter changes and the percentage of the FY 2025-26 Amended Budget spent as of Q3.
With nine months’ data in, General Fund Revenues & Transfers In are at 67% of the FY 2025-26 Amended Budget.
General Fund Expenditures & Transfers Out are at 63% of the Amended Budget. Revenues exceeded expenditures by $1,163,844 and showed a 4% increase compared to the prior year’s Third Quarterrevenues. This quarter’s expenditures showed a 1% increase compared to the prior year’s Third Quarter.
Table 1: General Fund Quarterly Summary as of March 31, 2026 The General Fund Balance as of March 31, 2026, is estimated to be $23,799,491, based on the audited General Fund balance of $22,635,647 as of the end of FY 2024-25 and factoring in year-to-date net change of $1,163,844 as of the end of the Third Quarter.
Expenditures Highlights: Table 2 presents General Fund Expenditures by Department for Quarter 3 (Q3) of Fiscal Year (FY) 2024-25, and Q3 FY 2025-26, alongside the amended budget for FY 2025-26. It also includes the percentage change in expenditures between Q3 of both fiscal years and the percentage of the budget spent in Q3 of FY 2025-26.
General Fund Qtr 3
FY2024-25
Qtr 3
FY2025-26
FY2025-26
Amended
Budget
% Change
Qtr 3 FY24-25
vs
Qtr 3 FY25-26
Qtr 3
% Budget
Revenues $ 33,610,952 $ 35,052,800 $ 52,200,100 4% 67%
Transfer in 1,066,500 1,109,100 1,478,800 4% 75% 67%
Expenditures 31,941,256 32,359,122 51,559,921 1% 63%
Transfer Out 1,598,950 2,638,934 3,643,226 65% 72% 63%
Net Change in Fund $ 1,137,246 $ 1,163,844 $ (1,524,247) City of Pacifica
Fiscal Year 2025‐26
ThirdQuarter Financial Report
2 Table 2: General Fund Quarterly Expenditures as of March 31, 2026 General Fund expenditures increased slightly from $33.5M in Q3 FY 24-25 to $35.0M in Q3 FY 25-26. As of March 31, 2026, 63% of the amended budget has been expended, compared to the 75% benchmark for this point in the fiscal year. This suggests that departments are generally on track or slightly under budget; however, the variance is likely influenced by timing differences, such as lagging vendor invoice payments. At the end of the third quarter, expenditures and transfers out increased by 4% compared to the same period in the prior fiscal year.
General Government which consists of the Administrative Services, City Manager, City Clerk, Economic Development and City Attorney divisions, show expenditures at approximately 61% of the amended budget as of the third quarter.
This is primarily due to lower spending on contractual services which may be attributable to timing delays in vendor invoice processing.
The Police Department experienced a 4% downward trend, approximately $340,000, in expenditures compared to the prior quarter, resulting in spending at 65% of the amended budget. These trends were observed across most expenditure categories, with the largest reduction in salaries and benefits as compared to last quarter. This is primarily attributed to staffing turnover during FY 2025–26.
The Fire Department is at 68% of the amended budget at the end of the third quarter. Salaries and benefits are trending lower by approximately $805,000 compared to the prior quarter, primarily due to prior-year overtime costs associated with OES mutual aid deployment for the January 2025 catastrophic Los Angeles fire event, which were not incurred in the current fiscal year. The other attributable factor is a vacant fire chief position that has not been filled since retirement in July 2025.
The Community Development department expenditures are at 54% of the amended budget as of the end of the third quarter. This lower percentage is partly due to timing differences in the processing and reconciliation of costreimbursable expenditures, including legal services, which are now being handled differently than in prior years. Staff is currently working with the department to improve the budgeting methodology for cost-reimbursable projects. The goal is to more accurately align both revenues and expenditures associated with these activities.
General Fund Expenditures
by Department
Qtr 3
FY2024-25
Qtr 3
FY2025-26
FY2025-26
Amended
Budget
% Change
Qtr 3 FY24-25
vs
Qtr 3 FY25-26
Qtr 3
% Budget
General Government $ 4,548,566 $ 5,129,710 $ 8,381,005 13% 61% Police Department 9,398,117 9,058,321 13,972,728 -4% 65% Fire Department 6,714,822 5,936,873 8,680,659 -12% 68%
Community Development 2,948,432 3,284,504 6,106,335 11% 54% Public Works 3,427,515 3,716,021 5,587,474 8% 67%
PB&R 4,295,973 4,472,264 7,133,895 4% 63%
Non-Departmental 607,831 761,428 1,697,824 25% 45%
Transfer Out 1,598,950 2,638,934 3,643,226 65% 72%
Total General Fund
Expenditures&TransferOut $ 33,540,206 $ 34,998,056 $ 55,203,147 4% 63% City of Pacifica
Fiscal Year 2025‐26
ThirdQuarter Financial Report
3 The Public Works department expenditures are at 67% of the amended budget as of the end of the third quarter.
Compared to the prior quarter, expenditures increased by 8%, or approximately $288,000, which is within expected levels.
The Parks, Beaches & Recreation (PB&R) department expenditures are at 63% of the amended budget as of the end of the third quarter. Compared to prior quarter, expenditures increased by 4%, or approximately $176,000, which is within expected levels.
Non-Departmental expenditures are at 45% of the amended budget as of the end of the third quarter, below the 75% benchmark. This variance is primarily due to unspent appropriations for general city legal services and community grant programs as of the Q3 financial reports. Timing delays of the legal services generally trend two months out as invoices are reviewed by several departments.
The Transfer Out category is expected to be at approximately 75% of the amended budget at the end of the third quarter, consistent with the standard practice of four quarterly allocations based on the original budget. However, at the time of this report, the amended transfer entries related to the Mid-Year Budget adjustments—approved at the March 9 Council meeting for funding support to the Motor Pool and Tree Fund—had not yet been recorded.
Revenues Highlights: Table 3 outlines General Fund Revenues by Type for Q3 FY 2024-25 and Q3 FY 202526, alongside the FY 2025-26 Amended Budget and percentage changes.
Table 3: General Fund Quarterly Revenues as of March 31, 2026
General Fund
Revenues by Type
Qtr 3
FY2024-25
Qtr 3
FY2025-26
FY2025-26
Amended
Budget
% Change
Qtr 3 FY24-25
vs
Qtr 3 FY25-26
Qtr 3
% Budget
Property tax $ 10,551,938 $ 11,196,565 $ 17,728,670 6% 63% Sales Taxes 1,819,341 1,869,456 3,125,230 3% 60%
Measure Y 1,502,758 1,561,149 2,560,000 4% 61%
Transient Occupancy Tax 2,216,836 2,628,686 2,984,221 19% 88% Franchise Tax 548,304 450,084 1,171,440 -18% 38%
Business License Tax 546,948 609,892 582,000 12% 105%
Utility Users Tax 2,485,083 1,941,006 3,646,762 -22% 53% Vehicle License Fee 3,146,649 2,952,110 4,639,057 -6% 64% Cannabis Tax 453,528 453,494 700,000 0% 65%
ERAF 145,000 2,197,243 3,860,000 57%
Grants 3,515,012 3,014,498 2,725,420 -14% 111%
Investment Earning 1,002,371 1,081,281 998,100 8% 108%
Department Programs 5,677,184 5,097,336 7,479,200 -10% 68% Transfer In 1,066,500 1,109,100 1,478,800 4% 75%
Total General Fund
Revenues&TransferIn $ 34,677,452 $ 36,161,900 $ 53,678,900 4% 67% City of Pacifica
Fiscal Year 2025‐26
ThirdQuarter Financial Report
4 The following is a summary of revenues as of the end of the 3rd Quarter:
General Fund revenues (including transfers in) increased from $34.7M in Q3 FY 2024-25 to $36.2M in Q3 FY 2025-26, representing a 4% increase, or approximately $1.5 million, quarter over quarter. To date, 67% of the amended budget has been collected, indicating strong revenue performance.
Property Tax: Property Tax is the City’s largest revenue source. The first installment of the Property Tax payment was remitted to the City by the County of San Mateo on December 15, 2025. The second installment of the property tax payment is expected in April. Property Tax revenue increased by approximately 6% in the quarter-over-quarter comparison, primarily driven by growth in secured property tax receipts. In contrast, real property transfer tax is currently below budget expectations, with $154,000 received out of the $360,000 amended budget. A two-year comparison also indicates a slowdown in property sales activity, as revenues were $218,000 during the same period in the prior fiscal year.
Sales Tax and Measure Y: As of March 31, 2026, the City has received 60% and 61% of the budgeted Sales Tax and Measure Y Sales Tax revenues, respectively. There is typically a two-month lag in the receipt of sales tax revenues; therefore, current collections reflect approximately seven months of activity. This is consistent with the prior year’s trend and appears to be on track when accounting for the expected two-month lag (approximately 17%).
Transient Occupancy Taxes (TOT): Transient Occupancy Tax (TOT) revenue increased by approximately 19% compared to the same period in the prior fiscal year. TOT revenues are typically remitted about 30 days after the end of each month and are not accrued at quarter-end (as they are at fiscal year-end). As a result, third-quarter figures reflect receipts for the period of July through February. As of March 31, 2026, 88% of the amended budget has been collected, indicating strong performance with four months remaining in the fiscal year. This is largely due to the additional collection of TOT through the VRBO voluntary agreement. This offset projected reductions from the STR portion of the TOT category.
Other Taxes: These include five categories: Franchise tax, Business License, Utility Users Tax, Vehicle License Fee, and Cannabis Operations Tax. Payments for most of these taxes are remitted 30 days after the end of the month. 60% of the amended budget has been received as of March 31, 2026.
Franchise Tax revenues reflect a decrease of approximately 18% compared to the same period in the prior fiscal year and should be monitored closely, as only 38% of the amended budget has been collected to date. While this may initially suggest potential compliance or collection concerns, it is important to note that the City’s largest franchise tax payer, Pacific Gas and Electric Company, typically remits payments in mid-April. As such, collections through the third quarter are consistent with expected timing patterns.
Business License Tax revenues are at 105% of the amended budget as of the third quarter. This is primarily due to the annual business license renewal cycle, which occurs on November 1 and is largely recognized by the second quarter. As a result, revenues have already met and slightly exceeded the amended budget. Additional revenues are expected in the coming months from new business activity and delinquent payments, though these amounts are anticipated to be minimal.
Utility Users Tax is the second largest revenue source within the Other Taxes category, with an amended budget of $3.6 million. As of March 31, 2026, 53% of the budget has been collected. Upon further analysis, UUT revenues from Pacific Gas and Electric Company are generally in line with expectations, with year-to-date City of Pacifica
Fiscal Year 2025‐26
ThirdQuarter Financial Report
5 collections tracking close to budget and at approximately 75% of the amended budget. Also, their year-over-year data is very comparable. However, UUT revenues from other providers are significantly below expectations. Of the $1.58 million budgeted, only $390,000 has been received to date, compared to $962,000 during the same period in the prior fiscal year. Staff is currently reviewing reporting activity to identify potential gaps, as UUT compliance relies on self-reporting by service providers.
Vehicle License Fee (VLF) in Lieu (property tax in lieu of VLF) is the largest in the other tax category. It includes revenue includes a one-time backfill payment of $1,548,290 from the state for the VLF shortfall in FY 202425 and 50% of the FY 2025-26 distribution of $1,344,691. The next remittance is likely to happen around August 2026 for the 45% of the FY 2025-26 which will be accrued back to Q4 financial. San Mateo County initiated a rally for the State VLF backfill, and Pacifica has sent representatives to speak on our behalf to advocate for a permanent fix to the backfill payment problem.
Cannabis Tax is at 75% of the amended budget as of the end of the third quarter. Revenues are consistent with the same period in the prior fiscal year. Based on current trends, collections are expected to meet budget projections by year-end.
Excess ERAF: (Excess Educational Revenue Augmentation Fund). The FY 2024–25 General Fund budget included $145,000 in Excess ERAF to support the community grant program for local nonprofit organizations, as previously directed by the City Council. This amount was recognized upon receipt of the initial ERAF payment in January. The remaining FY 2024–25 Excess ERAF allocation is shared equally between the Disaster Fund and the Housing Fund, in accordance with prior Council direction for designated uses. However, due to potential General Fund deficit considerations, it was strategically determined that all ERAF receipts from the County will initially be recorded in the General Fund in FY 2025-26, rather than being directly allocated to the Disaster and Housing Funds. Subsequent transfers will be made in accordance with Council approved allocations. This explains the increase of $2.1M in ERAF revenue in FY 2025-26 as compared to last year.
Grants: Grant revenues include Police Department grants, Fire OES reimbursements, as well as Parks, Beaches & Recreation (PB&R) childcare and senior program grants. As of the end of the third quarter, grant revenues are at 111% of the amended budget, primarily due to the timely billing and receipt of childcare and senior program reimbursements totaling approximately $2.7 million, some from prior years contracts.
Investment Earnings: Investment earnings such as interest income continue to be doing well in the current economy, with favorable interest rate returns on bank deposits strategically managed by staff. It has already reached 108% of the budget. However, Finance does a year end interest allocation to all allocable funds for earned interest through the year.
Department/Programs: These include building permits, engineering and planning fees, fees related to Parks, Beaches & Recreation programs, and rentals. As of March 31, 2026, the City has received 68% of the amended budget, or approximately $5.1 million, which is slightly below budget expectations. These revenues are generally driven by resident and private development activity, including construction and remodeling demand, and are therefore difficult to forecast with precision. Permit and planning fee revenues tend to fluctuate based on the timing and volume of development projects.
Transfers In: Transfers in represent cost recovery from three funds that are not directly charged for personnel and administrative support costs, which are borne by the General Fund. These transfers in from the Measure A Fund, City of Pacifica
Fiscal Year 2025‐26
ThirdQuarter Financial Report
6 NPDES Fund and Gas Tax Fund reimburse the General Fund for administrative overhead and related support services.
To facilitate cost recovery, transfers in are recorded in four quarterly installments throughout the fiscal year. These amounts are consistent with the amended budget and are tracking as expected.
SUMMARY
Overall, staff is pleased to report that the FY 2025-26 budget is on track, with revenues and expenditures performing well, and, in certain cases, a little better than expected, leading to a positive estimated net change of $1,163,844.
The City’s total General Fund Expenditures & Transfers Out are at 63% of the amended budget at the end of the third quarter, and the City’s total General Fund Revenues & Transfers In are at 67% of the amended budget at the end of the third quarter.
It is important to note that the figures presented in this report are preliminary, as additional booking entries may be recorded throughout the remainder of the fiscal year and during year-end closing. Nonetheless, it is encouraging to observe that the budget remains on track as of the end of the third quarter.