CITY COUNCIL STAFF REPORT
DATE: JUNE 10, 2026 PUBLIC HEARING
SUBJECT: GENERAL FUND AND AIRPORT FUND FISCAL YEAR 2026-2027
CONTINUATION BUDGET ADJUSTMENT
FROM: Scott C. Stiles, City Manager
BY: Department of Finance and Treasury
SUMMARY:
The City Council will receive a presentation containing the adjusted continuation budget for Fiscal Year 2026-27 (FY27). This meeting will be for public comment as required for budgetary changes prior to adoption by the City Council. Staff will bring back this item at the June 24, 2026 City Council meeting for adoption by resolution.
RECOMMENDATION:
1) Open the public hearing and accept public testimony on the FY27 Continuation Budget; and
2) Direct the City Manager and Director of Finance and Treasurer to make the appropriate modifications to the FY27 Budget.
STAFF ANALYSIS:
At the June 25, 2025 City Council meeting, the Council approved the biennial budget for fiscal year 2025-2026 (FY26) and fiscal year 2026-2027 (FY27) for all funds. City Staff is proposing adjusting the FY27 budget in the following General Fund areas:
City Council Staff Report
June 10, 2026 -- Page 2
Continuation Budget Adjustment FY2026-27 (FY27)
TABLE 1
Description FY 26-27
Adopted Budget
Continuation
Budget
Adjustment
FY 26-27
Adjusted
Budget
Note #
Revenue
Transient Occupancy Tax $ 49,586,656 $ 49,586,656
Property Taxes 38,643,913 500,000 39,143,913 Note 1
Sales and Use Taxes 30,167,739 750,000 30,917,739 Note 1 Permits, Fines, and Fees 16,677,831 16,677,831
Utility Users Tax 11,023,949 11,023,949
Motor Vehicle In-Lieu Tax 8,131,408 8,131,408
Other Taxes 7,067,900 7,067,900
Miscellaneous Income 4,552,595 1,200,000 5,752,595 Note 2 Franchise Tax 4,406,529 4,406,529
Interest Income 3,871,734 3,871,734
Cannabis Tax 1,053,481 1,053,481
Total Revenue $ 175,183,735 $ 2,450,000 $ 177,633,735
Transfers from Other Funds 0 0
Total Revenue & Transfers $ 175,183,735 $ 2,450,000 $ 177,633,735 Expenses
Admin & Economic Development $ 9,085,631 $ 585,000 $ 9,670,631 Note 3 Development Services 22,124,891 577,000 22,701,891 Note 4 Fire Department 30,003,859 80,000 30,083,859 Note 5
General Government 21,971,410 70,000 22,041,410 Note 6
Library 3,348,020 260,000 3,608,020 Note 7
Miscellaneous Expense 1,746,907 1,746,907
Parks and Recreation 12,016,068 12,016,068
Police Department 46,861,918 250,000 47,111,918 Note 8
Public Works 10,435,969 120,000 10,555,969 Note 9
Tourism and Community Support 8,564,565 135,000 8,699,565 Note 10 Total Expenses $ 166,159,238 $ 2,077,000 $ 168,236,238
Transfers to Other Funds 8,866,465 -1,347,972 7,518,493 Note 11 Total Expense & Transfers $ 175,025,703 $ 729,028 $ 175,754,731 $ 0
Total Operating Surplus/(Deficit) 158,032 1,720,972 1,879,004 0 Grant Revenue $ 2,832,283 $ 2,832,283
Grants Expense (2,832,283) (2,832,283)
Council Set Aside Expense 0 (2,570,000) (2,570,000) Note 12 Debt Issuance 0 0
CalPERS Payment Safety Plan 0 0
N on-operating Total $ 0 ($ 2,570,000) ($ 2,570,000)
$ 0
Total Surplus/(Deficit) $ 158,032 ($ 849,028) ($ 690,996)
EXECUTIVE SUMMARY
General Fund - Continuation Budget FY27
City Council Staff Report
June 10, 2026 -- Page 3
Continuation Budget Adjustment FY2026-27 (FY27)
Note 1 – Property Tax and Sales Tax revenue – The increase of $500k and $750k respectively is to both revenue line items trending favorably.
Note 2 - Miscellaneous Income – The $1.2 million increase in revenue is to adjust administrative charges to the Airport Fund and Wastewater Fund. As a result of the recent FAA audit, we engaged Willdan to do a study on the allocation of City central services (Finance, HR, City Clerk, etc.) to funds other than the General Fund. The result of the study was to increase the Airport charge from the current $2.2 million annually to $3.2 million annually. The remaining $200k is to add an administrative charge to the Wastewater fund in the amount of $200k. This fund historically has only been charged a minimal administrative charge for Finance to process related Accounts Receivable.
Note 3 – Admin & Economic Development - $585k increase due to the following:
1. $225k carryover from FY26 for Economic Development initiatives such as the implementation of code and regulatory outcomes from the CVL Economics audit, marketing/web effort to develop an economic development digital “hub”, and to develop a capital program beyond the current façade program.
2. $300k increase in the legal services budget due to increased legal activity.
3. $60k increase in the City Council budget for the Blue Zones initiative. This is Year 2 of a 3-year agreement.
Note 4 – Developmental Services - $577k increase due to the following:
1. $150k carryover from FY26 for Engineering for plan check services.
2. $427k carryover for the following items:
• Completion of the comprehensive update to the zoning code • Development of non-residential urban design guidelines in coordination with stakeholder group of PS Architectural Alliance
• Continued work on the Tram View Heights Specific Plan • Develop pre-approved plans to simplify the process and reduce costs for homeowners to build ADUs
• Work associated with applying for State Pro-Housing Designation
Note 5 – Fire Department - $80,000 carryover from FY26 to purchase a swift water trailer for $30k and a self-contained breathing apparatus for Fire Station #5 at a cost of $50k.
Note 6 – General Government - $70,000 carryover from FY26 for services related to additional Communications and Legal Services.
Note 7 – Library - $260k proposed adjustment is comprised of $50k of carryover from FY26 and adding an additional $210k to purchase new collection materials and start a rebranding campaign. All related to the opening of the newly constructed Library.
Note 8 - Police Department - $250k carryover from FY26 for the purchase of a new armored, tactical vehicle (BearCat). It is the intention of the Department that once the new BearCat is delivered, the old BearCat will be donated to Cathedral City.
City Council Staff Report
June 10, 2026 -- Page 4
Continuation Budget Adjustment FY2026-27 (FY27)
Note 9 – Public Works - $120k proposed adjustment is comprised of $20k carryover from FY26 for Kimley Horn services related to Caltrans Land Management Agreements and $100k additional for City Landscaping services.
Note 10 – Tourism and Community Support - $135k additional for the annual payment to Visit Greater Palm Springs relating to the joint authority agreement between the Coachella Valley City’s and VGPS. The total support would be just over $1 Million.
Note 11 – Transfers to Other Funds - $1.35 Million will be moved to the COGEN fund.
Historically, the General Fund has made the debt service payments related to issued debt for COGEN plant improvements and equipment purchases.
Note 12 – Council Set Aside Expense – $2.57 Million carryover from FY26 for payments related to the Desert Highland Scattered Site Single Family Homes affordable housing initiative.
On the following page, City is proposing adjusting the Airport Operations Fund in the following areas:
City Council Staff Report
June 10, 2026 -- Page 4
Continuation Budget Adjustment FY2026-27 (FY27)
City Council Staff Report
June 10, 2026 -- Page 5
Continuation Budget Adjustment FY2026-27 (FY27)
TABLE 2
City Council Staff Report
June 10, 2026 -- Page 5
Continuation Budget Adjustment FY2026-27 (FY27)
City Council Staff Report
June 10, 2026 -- Page 6
Continuation Budget Adjustment FY2026-27 (FY27)
Note 1 – Airline Revenue – The following are proposed adjustments, totaling $3.2 million, to the Airline revenue:
1. Proposed adjustments are related to the rates and charges calculation for the FY26 operating budget. These are charges the Airlines pay the Airport for operating. The rates and charges increase from FY25 to FY26 was 46% and was not implemented till August 1, 2025, thus not included in the adopted FY26 and FY27 budgets. These adjustments reflect this increase.
2. In the latest negotiated Airline Use and Lease Agreement (AULA), it was determined the Airline would share a portion of surplus with the Airlines based on a specific calculation related to the operations budget. The Airline Revenue Share Settlement was originally an expense in the income statement, but at the advice of the Airports Financial Advisor, FRASCA, it is proposed to treat it as a subtraction of revenue. The result is the same, this is just a change in income statement presentation.
Note 2 – Non Airline Revenues – Non-Aeronautical Ground Rental – As a result of the FAA audit, the Airport needed to obtain recent fair market value assessments of all City and Non-City buildings that occupy Airport property. This increase in lease revenue is for the City Yard. The City was paying approximately $175,000 to the Airport annually for the use of the property. The fair market value was assessed at approximately $790,000 annually resulting in an increase of $615,000.
Note 3 – Non Airline Revenues – Proposed adjustments are to align revenues with current run rates. Some notable changes include the following:
1. The adjustment to the Parking revenue is to capture a full year’s worth of the parking fee daily rate increase ($20 to $26) that went into effect in December, 2025.
2. The adjustment to On Airport Rental Car revenue is to capture the minimum annual guarantee (MAG) payment to the Rental Car companies which occurs later in the year. The payment back to the Rental Car companies for overpayments they made in the first half of the fiscal year.
Note 4 – Airport Administration – Proposed adjustments include the following:
1. Transfer of $2.2 million to the revenue portion of the income statement as described in Note 1 above.
2. The addition of $1 million administration charge by the City for City central services (IT, HR, Finance, etc.)
City Council Staff Report
June 10, 2026 -- Page 7
Continuation Budget Adjustment FY2026-27 (FY27)
Note 5 – Airport Law Enforcement and Airport Rescue Fire – During the FY25 audit, City staff noted the Airport didn’t have enough CalPERS liability on their balance sheet for public safety staff. After consulting with the City’s Auditors, it was agreed to make this an entry in FY26 and beyond. The total liability needed is approximately $8 million. The Auditors have allowed this to be spread over 4 years in order to minimize the impact. City staff is proposing adjustments to Airport Law Enforcement in the amount of $750k and Airport Rescue – Fire for $1.2 million for a total of $1.95 million.
Note 6 – Various Departments – Propose adjustments to the budget in the following areas:
1. $300k to the Landside Operations budget for additional parking management services. The run rate for these services is just over $1 million and budgeted currently for FY27 is $700k. In addition, the Landside Operations budget absorbs all of the credit card fees for parking income, which is approximately $200k. This increase of a total of $500k will be offset by a reduction in the contractual services budget of the Terminal Building Operations Department of $500k.
2. Propose adding $350k for additional baggage relocation and wayfinding services to support Airport and airline operations within the terminal and baggage handling areas. This addition will be offset by reducing the contractual services in the Airport Administration Department by $350k.
Note 7 – Transfers to Other Funds – Propose eliminating this transfer of $7.98 million.
The transfer of these funds is used to cover capital costs for various projects and it is common to transfer a large part of the surplus to the Airport Capital Fund annually. The transfer will resume at such time there is a better understanding of what projects can be funded and how much of the funding needs to come from Fund Balance. Those analyses are currently underway by Airport consultants.
Note 8 – IT, Airport Law Enforcement, and Airport Rescue – Fire – As a result of the FAA Audit, the City evaluated all charges to the Airport from City. The following is being proposed as adjustments to the FY27 budget:
1. The IT Departments manages an Internal Services Fund for equipment replacement throughout the City and charges all departments a monthly charge. It was determined in FY26 to directly charge the Airport for all IT equipment purchased rather than the monthly charge of $28k.
2. The City charges a public safety administrative charge to the Airport for all public safety administration. City staff reviewed this calculation and updated it to today’s salary and benefits, and it was determined to reduce this amount by $333k in total, $145k in Airport Rescue – Fire and $190k in Airport Law Enforcement. The original budgeted charge was $1 million and with this adjustment will be approximately $750k.
ENVIRONMENTAL ASSESSMENT:
None.
City Council Staff Report
June 10, 2026 -- Page 8
Continuation Budget Adjustment FY2026-27 (FY27)
ALIGNMENT WITH STRATEGIC PLANNING:
This item aligns with the following City Council Strategic Plan Foundation, Foundation of Financial and Organizational Well-Being.
FISCAL IMPACT:
The fiscal impact to the General Fund is adding just over $1.72 million to the budgeted operating surplus of $158,032 for a total budgeted operating surplus of $1.88 million.
There is a one-time non-operating charge to the General Fund of $2.6 million causing the General Fund to have a total deficit of $691k.
The fiscal impact to the Airport Fund is increasing the operating surplus by just over $3.3 million for a total operating surplus of $5.7 million.
REVIEWED BY:
Department Director: Kristopher J. Mooney
Interim Executive Director of Aviation: Victoria Carpenter City Manager: Scott Stiles
ATTACHMENTS:
None.