PISMO BEACH CITY COUNCIL STAF REPOR
Agenda Item #9.E
Meetin Date: Ma 5, 2026
TITLE:
Fiscal Year 2026 Third Quarter Financial Status Report
RECOMMENDATION:
No action recommended; for information only.
EXECUTIVE SUMMARY:
This report updates the City Council on the status of Fiscal Year (FY) 2025-26 ending on June 30, 2026, or FY 2026, financial status based on actual revenues and expenditures during the first nine months of the fiscal year.
The City of Pismo Beach’s financial outlook remains stable, with fund balances at sufficient levels. The General Fund’s unassigned ending balance for FY 2026 is estimated at $5.34 million, a decrease of $6.55 million compared to FY 2025. This decline is largely due to the planned use of fund balance for capital projects, including the Public Safety Facility, as well as a projected $1.28 million operating deficit and a $1.0 million discretionary payment to CalPERS to reduce the City’s unfunded pension liability. Both of these items are funded from the beginning unassigned balance.
For most of the City’s other funds, revenues and expenditures are projected to be on budget and the ending fund balances are in line with the FY 2027 Adopted Budget beginning fund balances. In all the other funds, there are sufficient fund balances and projected revenues to cover projected expenditures.
The following sections provide details of the General Fund financial picture, followed by a summary and highlights of the City’s other funds.
I. General Fund Budget Summary
In summary, based on early projections from the first nine months of the fiscal year, the General Fund is projected to end FY 2026 with a $5.34 million unassigned fund balance.
The FY 2026 projected $5.34 million unassigned fund balance is $2.15 million less than the FY 2026 Revised Budget. This decrease is attributable to $3.47 million in fewer one- time revenues, offset by an additional $185 thousand in operating revenues and $1.13 million in net operating expenditure savings compared to the Revised Budget.
The unassigned fund balance is used to support operations and pay for future one-time investments included in the FY 2026 budget and in the 10-year Capital Improvement Plan.
In addition to the General Fund unassigned fund balance, the General Fund includes the Budget Stabilization Reserve set-aside of $2.00 million.
Table 1 is a summary of the FY 2025 actuals and the FY 2026 General Fund revised budget, projected actuals, and a variance comparing the budget to projected actuals.
Council Agenda 5-5-2026 9.E-1
Table 1: FY 2026 General Fund Budget Summary
II. General Fund Beginning Fund Balance
The General Fund beginning fund balance is comprised of two different components:
The unassigned fund balance, which are funds that are not committed for any specific purpose and could be used for various one-time projects, and The committed or carryforward fund balance, which are funds that are committed for a specific budgeted use.
As illustrated in Table 2, the FY 2026 Adopted Budget General Fund beginning fund balance was projected to be $10.67 million. Based on changes during FY 2025 and carrying forward fund balance to cover previously budgeted but not-yet-spent expenditures, the fund balance is revised to $26.25 million. This includes $11.00 million of unassigned fund balance and $15.24 million of carryforward fund balances.
Table 2: FY 2026 General Fund, Beginning Fund Balance
A B C D = C - B
($ thousands)
FY 2025
Actuals
FY 2026
Revised
Budget
FY 2026 Year-
End Projected
Actuals
Variance
(Actuals-
Budget)
Unassigned Fund Balance 9,619$ 11,005$ 11,005$ -$ Committed Fund Balance 15,020 15,244 15,244 - a Beginning Fund Balance 24,639 26,249 26,249 - b Operating Revenues 35,425 33,901 34,086 185 c Operating Expenditures 29,014 36,499 35,367 (1,131) d = b - c Net Operating Surplus/(Deficit) 6,412 (2,598) (1,281) 1,316 e One-time Revenues 340 3,815 349 (3,467) f One-time/Capital Expenditures 4,077 17,470 10,595 (6,875) g =
a+d+e-f Ending Fund Balance 27,314$ 9,996$ 14,721$ 4,724$ Unassigned Fund Balance 11,892$ 7,270$ 5,120$ (2,150)$ Committed Fund Balance 15,244 - 6,875 6,875 Contribution to Reserves (1,822) 726 726 - Budget Stabilization Set-Aside 2,000 2,000 2,000 - ($ thousands)
Adopted
Budget
Budget
Revisions Actuals
Unassigned Fund Balance 10,674$ 331$ 11,005$
Capital Funds Carryforward 14,506 14,506
Purchase Orders Carryforward 637 637
Prepayment Carryforward 101 101
Total Fund Balance 10,674$ 15,575$ 26,249$
$15,244
Carryforward
Council Agenda 5-5-2026 9.E-2
III. General Fund Reserve
The City maintains various General Fund reserves totaling $9.15 million for emergency operations, building depreciation, and risk management. These reserves are crucial in order to avoid disrupting the City’s operations following unanticipated events. The reserves are shown in Table 3, followed by a summary of each reserve.
Table 3: General Fund Reserves
Reserve Amount $ thousands
General Fund 25% Reserve $8,398
Cit Buildin Reserve 500
Risk Mana ement Reserve 250
Total $9,148
General Fund 25% Reserve
The City has adopted a fiscal policy to fund a General Fund Reserve of 25% of General Fund budgeted annual operating expenditures for FY 2026. The General Fund reserve should be equal to $9.13 million, which is 25% of the total FY 2026 budgeted annual operating expenditures of $36.50 million. Currently, the General Fund Reserve is $8.40 million, of which $8.07 million is invested in various securities and $331 thousand is pending investment. This reserve allows the City to maintain its operations for a few months in the event that an emergency or disaster impacts the City’s finances, and can also be used for emerging opportunities. The City Treasurer will be investing an additional $726 thousand during FY 2026 to fully fund the General Fund Reserve.
City Building Reserve
The City Council created a City Building Reserve of $500 thousand, for the maintenance and upkeep of City facilities and buildings, particularly if funds are not available. This amount is equal to five years of annual depreciation on City-owned buildings.
Risk Management Reserve
The City Council established a Risk Management Reserve, contributing $50 thousand each year to the budget for unanticipated risk management costs. This reserve has a balance of $250 thousand, which is the maximum contribution level.
IV. General Fund Revenues
The FY 2026 Revised Budget includes total revenues of $37.72 million, with actual revenues anticipated to reach $34.44 million, which is $3.28 million less than budgeted.
Compared to FY 2025, the FY 2026 projected actual revenues are expected to decrease by $1.33 million, or 3.7%. This year-over-year decrease is primarily driven by fewer Other Revenues ($931 thousand), Transient Occupancy Tax (TOT) revenues ($464 thousand), and Transfers In from other funds revenues ($256 thousand). These declines are partially offset by a $606 thousand increase in permit revenues. Table 4 provides a summary of the General Fund revenue budget alongside the projected actual revenues for FY 2026.
This is followed by a detailed review of the top three revenue sources for FY 2026, as Council Agenda 5-5-2026 9.E-3
well as a discussion on significant variances between FY 2026 projected revenues and FY 2025 actual figures.
Table 4: FY 2026 General Fund Revenue Budget and Projected Actuals
Transient Occupancy Tax (TOT) revenues are projected to fall $382 thousand short of the budget and $464 thousand, or 3.1%, below the previous year’s revenues. TOT revenues are collected from an 11% tax on rent charged by lodging businesses for stays of 30 consecutive days or less. The projected decrease in TOT revenues is primarily due to several hotels undergoing renovations that are either fully or partially closed, as well as the impact of rainy weather on travel in November 2025. To date, TOT revenues are down an average of 2.7% during the first seven months of the fiscal year, with an additional projected average monthly increase of 2.2% for the remainder of FY 2026 compared to FY 2025. Chart 1 further illustrates actual FY 2026 TOT revenues collected in comparison to FY 2025.
A B C D = C - B E = C - A F = C/A-1
($ thousands)
Revenue Category
FY 2025
Actuals
FY 2026
Revised
Budget
FY 2026
Projected
Actuals
Variance
(Projected
Actuals -
Revised
Bdgt)
Variance
(FY26 Proj
Act - FY25
Actuals)
%
Variance
(FY26 Proj
Act v FY25
Actuals)
Proj
Actual
% of
Total
Transient Occupancy Tax 15,180$ 15,097$ 14,715$ (382)$ (464)$ -3.1% 42.7% Property-Related Taxes 7,740 7,655 7,759 104 18 0.2% 22.5% Sales and Use Tax 4,096 3,974 3,944 (30) (153) -3.7% 11.5% Other Revenues 4,015 2,854 3,084 231 (931) -23.2% 9.0% Permits 1,184 1,756 1,790 34 606 51.2% 5.2% Other Taxes 1,274 1,271 1,287 16 14 1.1% 3.7% Transfers In 1,126 920 870 (50) (256) -22.7% 2.5% Departmental Revenues 357 293 299 5 (59) -16.4% 0.9% Fees, Grants, Intergovernmental 454 81 338 257 (116) -25.6% 1.0% Total Operating Revenues 35,425$ 33,901$ 34,086$ 185$ (1,339)$ -3.8% 99.0% One-time Revenues 340 3,815 349 (3,467) 9 2.5% 1.0% Total Revenues 35,766$ 37,716$ 34,435$ (3,281)$ (1,331)$ -3.7% 100.0% Council Agenda 5-5-2026 9.E-4
Chart 1. TOT Revenues FY 2026 compared to FY 2025
According to data from Smith Travel Research Inc., which provides competitive benchmarking for the hotel industry, and excluding hotels closed for renovations, occupancy rates decreased slightly by 1.0% while average daily room rates increased marginally by 0.9% during the first seven months of the fiscal year compared to the same period last year.
Based on these trends and early indicators for March TOT, staff projects that TOT revenues will reach $14.72 million, representing a $382 thousand shortfall from the budgeted amount, and a 3.1% decrease, or $464 thousand decrease, from the previous year's TOT revenues.
Property-related tax revenues are projected to be $104 greater than budget and $18 thousand, or 0.2%, greater than previous year’s property-related tax revenues. There are two sources of property-related tax revenues:
o Property Tax Assessed Value revenues: equivalent to 1% of assessed values. o Property Tax In-Lieu of Vehicle License Fees: 1% tax on the market value of a registered vehicle.
Assessed value cannot increase by more than 2.0% per year per Section 2 of Article XIIIA of the California Constitution. The property tax projected actuals are based on San Luis Obispo County Auditor-Controller’s office certified assessed values for the current year.
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
TO
T
A
m
o
u
n
t
FY 2025
FY 2026
Council Agenda 5-5-2026 9.E-5
Sales and Use Tax revenues are projected to be $30 thousand less than budget and $153 thousand, or 3.7%, less than the prior year. Sales and use tax revenues are made up of two sources:
o Bradley-Burns uniform sales and use tax, which is a 1.0% tax on taxable sales within the City.
o Public safety tax, which is a 0.5% tax on taxable sales for specified public safety purposes.
Based on actual sales tax receipts to date, the Bradley-Burns Uniform Sales and Use Tax is projected to be $30 thousand less than budget expectations, and fall short of the prior year’s revenues by $153 thousand. Using data from the City’s sales tax consultant and actual revenues collected so far, City staff estimates that Bradley- Burns sales and use tax revenues will total $3.94 million. Chart 2 illustrates sales tax revenues received in FY 2025 and FY 2026 by the month in which the sales tax was collected.
Chart 2. Bradley Burns Sales Tax Revenues FY 2026 compared to FY 2025
The public safety sales tax revenues are budgeted at $123 thousand in FY 2026 and are anticipated to be equal to budget. This FY 2026 projected amount is $911 greater than the FY 2025 public safety sales tax revenues.
In summary, sales and use tax revenues are projected to be $30 thousand less than budget and $153 thousand, or 3.7%, less than the prior year.
Other Revenues are projected to come in $231 thousand greater than budget but $931 thousand, or 23.2%, lower than the previous year. This category includes fines and forfeitures, interest earnings, rents and leases, various service fees, and other miscellaneous revenue sources. The year-over-year decrease is primarily attributable to several one-time items recorded in FY 2025 that will not recur in FY 2026, including a $411 thousand legal settlement and a $515 thousand investment valuation gain $-
$100,000
$200,000
$300,000
$400,000
$500,000
Sa
l
e
s
T
a
x
A
m
o
u
n
t
FY 2025
FY 2026
Council Agenda 5-5-2026 9.E-6
reflecting the difference between original cost and fair market value. In addition, interest earnings are projected to decline by $97 thousand due to lower interest rates.
These decreases are partially offset by a projected $268 thousand increase in charges to other funds.
Transfers In from other funds are projected to be $50 thousand less than budget and $256 thousand, or 22.7%, less than the prior year. The year-over-year decrease is primarily due to one-time transfers recorded in FY 2025 that will not recur in FY 2026.
These include $101 thousand in impact fees transferred to the General Fund for capital projects, as well as $170 thousand from the Lodging Business Improvement District (LBID) Fund. This LBID transfer in FY 2025 included $120 thousand for a one- time purchase of Christmas decorations (compared to $41 thousand budgeted for FY 2026) and $50 thousand for beautification, which is not anticipated in FY 2026 unless a public art project is identified.
Permits are projected to be $35 thousand greater than budget and $606 thousand, or
51.2%, greater than the prior year. This additional $606 thousand compared to FY 2025 anticipates the projected one-time developments, including Shell Beach Road at Beachcomber, the Gateway project on Price Street, and other commercial and multi-family developments.
V. General Fund Expenditures
The FY 2026 Revised Budget expenditures total $53.97 million and projected actual expenditures total $45.97 million.
Total operating expenditures for the third quarter total should be about 75% of the budget, assuming the timing of expenditures is consistent throughout the year. This year, about 64% of the operating budget has been spent in the first three quarters, while only 5% of the one-time capital expenditure budget has been spent in the first three quarters. These one-time costs are dependent on the timing of construction of these projects. Table 5 provides details of actuals as a percentage of budget by expenditure category, followed by explanations of the large variances from the 75% mark.
Council Agenda 5-5-2026 9.E-7
Table 5. FY 2026 General Fund Expenditure Budget and Projected Actuals
Some operating costs that do not reflect consistent monthly spending include:
Professional Services, which reflects that 42% was spent in the first three quarters of the year. These costs are based on the timing of work performed and are not set amounts per month. The majority of the savings includes a projected $400 thousand savings in the Cal Fire contract.
Contract Services, which reflect that 67% of the budget was spent in the first three quarters. Staff anticipates about $333 thousand in savings for the year in contract services based on the current level of spending, mostly in garbage costs, travel and training costs, and risk management and insurance cost savings. Debt Service, which reflects that 65% was spent in the first three quarters. Debt service payments are due in December and June each year and do not follow a consistent monthly draw.
Operations & Maintenance, which reflects that 55% was spent in the first half of the year. Staff anticipates about $155 thousand in savings for the year in operations & maintenance based on the current level of spending for weed abatement, major repair and maintenance, and other city-wide operation and maintenance costs. Other Financing Uses, which includes a $500 thousand general contingency budget and reflects that only 28% of the budget has been spent in the first nine months of the year. This budget is allocated over time based on unanticipated costs that come up throughout the year and are not a consistent allocation of expenditures. Retiree Medical Insurance costs, which reflects that 0% of budget was spent in the first three quarters. The monthly costs are payments to Retirees, but the majority of A B C D = C/B E F = B - E
($ thousands)
Expenditure Category
FY 2025
Actuals
FY 2026
Revised
Budget
FY 2026
Third
Quarter
Actuals
Third Quarter
Actuals % of
Budget
FY 2026
Projected
Actuals
Variance
(Revised
Bdgt -
Projected
Actuals)
Proj
Actual
% of
Total
Salaries & Wages 9,606$ 10,861$ 7,618$ 70% 10,861$ -$ 23.6% Benefits 5,585 6,583 5,080 77%6,583 - 14.3% Professional Services 3,995 6,107 2,595 42%5,616 491 12.2% Contract Services 3,330 3,946 2,643 67%3,613 333 7.9% Debt Service 1,934 2,808 1,815 65%2,808 - 6.1% Operations & Maintenance 1,846 2,137 1,172 55%1,982 155 4.3% Other Expenses 1,561 1,943 1,411 73%1,841 102 4.0% Transfers Out 740 1,157 774 67%1,287 (130) 2.8% Other Financing Uses 206 610 174 28%610 - 1.3% Retiree Medical Insurance 182 279 156 0%99 180 0.2% Capital Projects 31 67 52 0%67 - 0.1% Total Operating Expenditures 29,014$ 36,499$ 23,489$ 64% 35,367$ 1,131$ 76.9% One-time Capital Costs 4,077 17,470 953 5% 10,595 6,875 23.1% Total Expenditures 33,091$ 53,969$ 24,442$ 45% 45,963$ 8,006$ 100.0% Council Agenda 5-5-2026 9.E-8
these payments are contributions to CalPERS for the actuarially determined contribution and are paid toward the end of the fiscal year.
VI. General Fund Contingency Budgets
General Contingency
The FY 2026 Adopted Budget included $500 thousand in the General Fund general contingency account that may be used for various one-time items that come up during the year. Of this amount, $81 thousand of this appropriation was allocated for the following purposes as outlined in Table 6, leaving $419 thousand remaining.
Table 6. FY 2026 General Fund Contingency Budget
Council Contingency
The FY 2026 Adopted Budget also includes a $5 thousand City Council contingency appropriation that may be used for various one-time items that come up during the year.
None of this contingency has been allocated in the first three quarters of FY 2026.
VII. Next Level Budget
The FY 2026 Adopted Budget included $200 thousand in the General Fund non- department contract services account that may be used for various “next-level” contract services. This amount was transferred to support various Public Works Facilities Division contract services.
Beginning Balance July 1, 2025 500,000$
Appropriations
Happy Time Preschool donation (20,000)$
Pier Avenue Stairs (51,343)
DeAnza Trail 250th Anniversary @ Price House (10,000)
Total Appropriations (81,343)
Ending Balance as of March 31, 2026 418,657$
Council Agenda 5-5-2026 9.E-9
VIII. Other Funds
Table 7 reflects fund balance, projected revenue, and projected expenditure activity in the City’s other funds. For most funds, revenues and expenditures are projected to be on budget and the ending fund balances are in line with the FY 2027 Adopted Budget beginning fund balances.
Table 7. Other Funds
A B C D = B - C E = A + D F G = E - F
Fund
Type Fund Fund Title
Beginning
Fund Balance
Projected
Actual
Revenue
Projected Actual
Expenditure Net Rev - Exp
Projected
Ending Fund
Balance Carryforward
Unrestricted
Fund Balance
General Operating Funds
1001 General Fund 26,248,733 34,434,709 45,962,592 (11,527,883) 14,720,849 6,874,740 7,119,948 1002 Transaction Sales Tax Fun 6,213,697 4,063,717 955,982 3,107,735 9,321,432 5,837,068 3,484,365 Special Revenue Funds
2001 Gas Tax Fund 415,924 462,250 142,358 319,892 735,815 150,000 585,815 2002 Local Transportation 551,287 100,912 5,910 95,002 646,288 - 646,288 2003 PEG Fund 144,882 32,699 9,123 23,576 168,458 26,790 141,668 2004 Grants-NonCapital 159,648 185,008 290,943 (105,935) 53,713 - 53,713 2005 Housing In-Lieu Fee 624,286 10,469 60,609 (50,140) 574,146 - 574,146 2006 LBID Operations 594,006 1,400,732 1,603,985 (203,253) 390,753 - 390,753 2006 LBID Improvements 2,962,756 1,400,732 116,378 1,284,354 4,247,110 - 4,247,110 2007 Chapman Estate 5,781 29,033 33,989 (4,956) 825 - 825 Capital Project Funds
3001 Capital Projects 26,384,359 33,173,404 33,173,404 - 26,384,359 26,384,359 - 3002 Public Facilities Fund 957 - - - 957 - 957 3003 Park Development Fund 319,803 26,805 33,554 (6,749) 313,055 82,193 230,862 3101 Circulation Fees 621,728 35,089 6,995 28,094 649,822 - 649,822 3102 Impact Fees 314,716 75,093 702 74,391 389,107 239 388,868 3103 Developer Impact Fee 65,179 4,465 - 4,465 69,643 - 69,643 3201 Underground Utility Fnd 18,003 441 - 441 18,444 - 18,444 Debt Service Funds
4001 PFA Debt Service - - - - - - - 4002 PF Agency Debt 900 3,089,818 3,089,818 - 900 - 900 4101 Reass 92-1 Fwy Fthlls 833 - - - 833 - 833 4102 Spyglass 92-4 13,867 - - - 13,867 - 13,867 Enterprise Funds
6101 Water Enterprise 12,380,908 6,471,873 6,105,770 366,103 12,747,011 12,747,011 - 6102 Water Tax (Lopez/State) 668,445 1,924,378 2,589,202 (664,824) 3,622 3,622 - 6103 Water Construction Fund 1,824,652 395,825 161,580 234,245 2,058,897 2,058,897 - 6104 Water Expansion Fund 692,250 88,067 - 88,067 780,318 780,318 - 6105 Water Central Coast Blue 3,314 6,560 6,796 (236) 3,078 3,078 - Water Enterprise Funds 15,569,570 8,886,704 8,863,348 23,356 15,592,926 15,592,926 - 6201 Wastewater Treatment 6,228,768 6,552,621 7,564,530 (1,011,910) 5,216,858 5,216,858 - 6202 Wastewater Capital Proj 2,070,776 1,533,062 1,445,576 87,487 2,158,263 2,158,263 - 6203 Wastewater Expansion 1,736,936 172,378 - 172,378 1,909,314 1,909,314 - 6204 Wastewater Central Coas 6,730 13,513 13,526 (13) 6,717 6,717 - Wastewater Enter rise Fu 10 043 210 8 271 574 9 023 63 752 057 9 291 152 9 291 15 - 6401 Pier Enterprise - 114,465 114,465 - - - - 6501 Parking Enterprise 2,349,888 3,565,326 3,129,226 436,099 2,785,987 2,785,987 - Internal Service Funds
7101 Technology Service Fund 756,938 2,462,470 2,390,719 71,751 828,689 - 828,689 7201 Motor Vehicle Fund 4,617,476 2,441,142 2,394,316 46,826 4,664,302 - 4,664,302 Council Agenda 5-5-2026 9.E-10
Highlights of Other Funds
Transaction Sales Tax Fund (1002)
The Transaction Sales Tax Fund includes a 1.00% transaction sales and use tax that became effective April 1, 2025. This is the third local measure for a transaction sales and use tax, approved by the voters as part of Measure F-24 at the November 2024 election.
Measure F-24 includes a 12-year sunset clause and will expire on March 31, 2037. Prior to this local measure, the first local measure for a 0.50% transaction sales and use tax was effective October 1, 2008, that included a six-and-one-half-year sunset clause and expired on March 31, 2015. On November 4, 2014, the voters approved another Measure, Measure I, the 0.50% transaction sales and use tax to be effective April 1, 2015 and was set to sunset on March 31, 2026. The tax proceeds are used exclusively for infrastructure projects.
This fund started the year with a $6.21 million beginning fund balance (after including carryforward fund balances). Projected actual revenues are $4.06 million. Projected actual expenditures are $956 thousand. After carrying forward $5.84 million to FY 2027, there is a $3.48 million projected ending fund balance in this fund. Table 8 lists the budgeted projects and projected actuals in this fund for FY 2026.
Table 8: Transaction Sales Tax Fund FY 2026 Budgeted Projects and Projected Actuals
Gas Tax Fund (2001)
The Gas Tax Fund is a Special Revenue Fund whose revenues include State gas tax funds based on the State’s apportionment formula. These funds are used for City street light costs, City traffic signal maintenance costs, and street repairs and/or capital Projects FY 2026 Budget
FY 2026 Projected
Actuals
FY 2025 Paving Project $ 2,277,326 $ 75,960 Ventana Sports Courts 1,000,000 107,774 Routine Street Maintenance 1,000,000 - Signalize Bello/Price Canyn Rd 489,000 - Ocean Blvd Improvements 435,860 - Dino Caves/Cliff Ave Parking 400,000 143,624 Cliff/Ocean Utility Undergounding 301,263 250,000 Price/Ocean View Improvements 250,000 46,930 ADA Transition Plan Update 132,600 14,700 Downtown Sidewalk Repair 123,000 123,000 Eldwayen Park Sidewlk Re-route 120,000 120,000 Vista Del Mar Stair Foundation 100,000 - Boosinger Park Softfall 75,000 - Trash Cans at Bus Stops 60,000 44,994 Ongoing Trash pick up at 17 Bus stops 29,000 29,000 Total $ 6,793,049 $ 955,982
Council Agenda 5-5-2026 9.E-11
improvements. This fund started the year with a $416 thousand beginning fund balance (after including carryforward fund balances). Projected actual revenues are $462 thousand and projected actual expenditures are $142 thousand for the streets and overhead costs. Based on the projected revenues and expenditures for the current year, after accounting for a $150 thousand carryforward of the Signalize Bello/Price Canyon Road project, there is a $586 thousand projected ending fund balance in this fund.
Local Transportation Fund (2002)
The Local Transportation Fund is a Special Revenue Fund whose funds are used for construction and maintenance of streets, bluff protection, and beach access. Revenues for this fund consist of State Transportation Development Act funds, which remain after funds are allocated for regional transit, local transit, and Ride-on services. Projected actual revenues are $101 thousand and projected actual expenditures are $6 thousand.
Based on the projected revenues and expenditures for the current year, there is a $646 thousand projected ending fund balance for this fund.
Public Education Government Fund (2003)
The Public, Educational, and Governmental (PEG) Access Fee Fund includes revenues from a PEG Access Fee collected from cable television providers (i.e. Charter Communications) with franchise operations within city limits. Expenditures include capital costs related to governmental cable broadcasting and equipment. Based on projected revenues of $33 thousand and projected expenditures of $9 thousand, the PEG Fund is expected to end the year with a $142 thousand fund balance.
Housing In-Lieu Fund (2005)
The Housing In-Lieu Fund is a Special Revenue Fund with revenues from a development impact fee paid to the City as an alternative to the production of affordable housing (housing in-lieu fee). These funds are used for the acquisition, construction, or rehabilitation of affordable housing. The fund is projected to have $574 thousand available by the end of the year for this purpose.
Lodging Business Improvement District Fund (2006) Operations The Pismo Beach Lodging Business Improvement District (LBID) Fund for operations reflects a 1% assessment on transient rents at transient lodging providers as revenues and budgeted expenditures to promote Pismo Beach lodging businesses. The LBID Fund started the year with a $594 thousand beginning fund balance. City staff projects that LBID assessment revenues and interest earnings will be $1.40 million. Operating expenditures are projected at $1.60 million. The fund is expected to end the year with a $391 thousand unrestricted fund balance.
LBID Fund (2006) Improvements
The LBID Fund for improvements includes a 1% assessment for physical improvements, in particular the Pier Plaza project. The LBID Fund started the year with a $2.96 million beginning fund balance. City staff projects that LBID assessment revenues and interest earnings will be $1.40 million. Expenditures include $116 thousand for various projects, including sponsorships of events, Holiday decorations, and the Butterfly Grove Trail Council Agenda 5-5-2026 9.E-12
Signage project. The fund is expected to end the year with a $4.25 million unrestricted fund balance. This amount, plus FY 2026 projected assessment revenues are anticipated to support future visitor-serving physical improvements. Table 9 lists the various visitor- serving projects supported by this fund.
Table 9: LBID2 Fund FY 2026 Budgeted Projects
There are several delays associated with the various projects identified for LBID Fund for improvements. This includes the Addie Street Restroom improvements project that is on hold pending various approvals required by the State. The Butterfly Grove crosswalk and Butterfly Grove Trail signage is on hold pending CalTrans relinquishment of Highway 1, which could be one or two more years. The beach cleaning equipment is on hold pending a Coastal Commission hearing in May for a conditional use permit. Staff is working to have the Butterfly Grove signage placed in areas where Highway 1 is not impacted.
Park Development Fund (3003)
The Park Development Fund is a Capital Project Fund with Quimby Act (park development in-lieu) fees and Impact Fees as funding sources to support construction costs of new parks and park lands, and the enhancement of existing parks to serve new development. The fund started the year with $320 thousand and is projected to receive $27 thousand in impact fee and permit revenues. Projected actual expenditures total $34 thousand. After accounting for carryforward budgets to next fiscal year, the fund is expected to end the year with a $231 thousand ending fund balance.
Water Enterprise Fund (6101)
The Water Enterprise Fund is an Enterprise Fund consisting of revenues from water billings and expenditures for: contract meter reading; direct water services and supplies; on-going inspection, repair, and maintenance of the City’s wells, tanks, booster stations, hydro-pneumatic system, and water distribution system components; water conservation efforts; and ensuring that a safe, drinkable supply of water is provided to Pismo Beach.
Water revenues are projected to be $6.47 million and expenditures are projected to be $6.11 million.
LBID2 Improvements FY 2026 Budget
FY 2026 Projected
Actuals
Addie Street Restroom Improvements $ 1,196,835 $ 378 Butterfly Grove Prkng Crosswlk 600,000 - Downtown Strategic Plan Update 500,000 - Beach Cleaning Equipment 100,000 - Sports Courts Lighting 60,000 - Butterfly Grove Trail Signage 50,000 25,000 Holiday Decorations 41,000 41,000 Beautification 50,000 - Pismo Beach Information Center 50,000 - Stewardship Banner Program 20,000 - Total $ 2,667,835 $ 66,378 Council Agenda 5-5-2026 9.E-13
The projected ending fund balance for the Water Enterprise Fund is $12.75 million, which is allocated for future water system capital costs, including the Central Coast Blue project.
Note that the Water Enterprise Fund also includes the Water Tax, Water Construction, Water Expansion, and the Central Coast Blue Regional Recycled Water Authority Water Funds and the ending fund balance across all these funds is $15.59 million.
There is litigation over Lopez Lake/Lopez Dam, which centers on a lawsuit filed in August 2024 by several environmental groups alleging that San Luis Obispo County has operated the dam in violation of the Endangered Species Act—in particular by not releasing sufficient flows to support spawning of endangered coastal steelhead in Arroyo Grande Creek. As a result of this litigation, the County has passed on the majority of these costs to the participants in the Flood Control Zone 3, including Pismo Beach. As a result, there is an unknown amount of litigation costs that will be impacting the City’s Water Enterprise Funds and that amount is currently unknown pending the outcome of the legal fees.
Wastewater Treatment Fund (6201)
The Wastewater Treatment Fund is an Enterprise Fund consisting of revenues from wastewater billings and expenditures for direct services and supplies; operation and maintenance of the City’s wastewater treatment plant and the wastewater collection facilities including pumps and pipelines; and ensuring the City’s treatment and collection system operations meet City, federal, and state laws and requirements. Wastewater revenues are projected to be $6.55 million and expenditures are projected to be $7.56 million. The estimated ending fund balance is $5.22 million which is already allocated for other wastewater capital projects. Note that the Wastewater Treatment Funds also include the Wastewater Capital Fund, the Wastewater Expansion Fund, and the Central Coast Blue Regional Recycled Water Authority Wastewater Fund. The total combined ending fund balance across all these funds is $9.29 million.
Pier Enterprise Fund (6401)
The Pier Enterprise Fund includes revenues from a concession lease on the Pier and expenditures for repair and maintenance of the Pier, Promenade, and nearby facilities.
Projected revenues are $114 thousand, from revenues from the Pier Airstream and a transfer from the General Fund. Projected expenditures include $114 thousand for Pier and Pier Plaza operating costs. The Pier Enterprise Fund is expected to end the year with a $0 ending fund balance.
Parking Enterprise Fund (6501)
The Parking Enterprise Fund is an enterprise fund supported by revenues from parking kiosks, citations, and permits. These revenues fund staffing, including a Parking Supervisor and Parking Enforcement Officer, and support implementation of the Pismo Beach Parking Management Plan. The Fund is used to improve the efficiency of existing parking operations, enhance enforcement and management, expand downtown parking availability, and build reserves for future parking infrastructure, including potential parking structures. Revenues are projected to reach $3.57 million and operating expenditures are projected to be $1.85 million. As shown in Table 10, in addition to operating expenditures, the budget includes $657 thousand for one-time projects. One planned project is the Council Agenda 5-5-2026 9.E-14
development of a parking lot at 320 and 330 Main Street once the temporary modular Police Department facilities are removed following the transition to the new Public Safety Facility. The current budget includes $150 thousand for a temporary dirt and gravel lot.
However, based on recent discussions, staff estimates that approximately $900 thousand will be needed to fully pave and complete the lot. Staff plans to return to Council during the Mid-Cycle Budget review in August 2026 to request the additional funding. Of these projects, staff projects that $1.28 million will be spent in FY 2026. The FY 2026 projected ending fund balance is $2.79 million.
Table 10: Parking Enterprise Fund FY 2026 Budgeted Projects and Projected Actuals Motor Vehicle Replacement Fund (7201)
The Motor Vehicle Replacement (MVR) Fund is an Internal Service Fund that funds the City’s motor vehicle operations and maintenance and motor vehicle replacements for various City departments. These costs are funded by accumulated fund balance, transfers from other funds, and motor vehicle rental charges to other funds. The MVR Fund started the year with a $4.62 million beginning fund balance. The FY 2026 projected ending fund balance is $4.66 million, which are accumulated funds necessary to fund future replacements.
Conclusion and Recommendation
Staff recommends that Council receive this report as information only.
FISCAL IMPACT:
There is no fiscal impact from receiving this report as it is information only.
ATTACHMENTS:
None
Submitted by: Nadia Feeser, Administrative Services Director City Manager Approval:
Projects
FY 2026
Budget
FY 2025 Projected
Actuals
Public Safety Facility 300,000$ 300,000$
320/330 Main St Parking Lot 150,000 900,000
Price/Dolliver Parking Lot Lighting 130,000 -
Addie St Parking & Access Impr 55,817 55,817
Parking Kiosk Machines 11,965 11,965
Radio System Reliability Upgrade 4,000 4,000
Other projects 4,855 3,864
Total 656,637$ 1,275,646$
Council Agenda 5-5-2026 9.E-15