FY 2024/25
MID-YEAR BUDGET PRESENTATION
February 18, 2025
City of Placentia
Presentation Overview
Budget Process
Adopted FY24/25 Budget- Where we started
Projected FY24/25 Budget- Where we now think we’ll be
Proposed Budget Modifications
Next Steps- Where we are going
Long Term Fiscal Sustainability
Annual Budget Process
Departments begin
preparing their
individual budgets
February Finance finalizes revenue
projections, internal
service charges and
personnel expenses
April
Finance and Public
Works finalize Capital
Improvement Plan
May
City Administrator presents
Proposed Budget to Public
and City Council
May
Budget Approval
City Council
June
Fiscal Year Begins
July 1
Finance closes out
prior fiscal year
August
Finance staff and
departments monitor
revenues and
expenditures
Year-round
Auditor working with
Finance staff on ACFR
December
Mid-Year Budget
Presentation to City
Council
February
We are here
Adopted FY 2024/25 Budget All Funds
CIP
20%
Operating
80%
Total Budget
General
Fund
51%
Enterprise
Funds
6%
Fiduciary
5%
Internal
Service
5%
Special
Revenue
33%
Debt
Service
Operating Budget
Total Adopted Revenues- $95,329,478
Total Adopted Expenditures- $99,225,368
Adopted FY 2024/25 Budget
General Fund Expenditures- $50,925,940
Capital
Projects
$180,000
0%
Operating
$44,143,318
87%
Transfers
Out
$143,756
0%
Debt Service
$6,458,866
13%
Adopted FY 2024/25 Budget
General Fund Revenues- $50,430,128
Sales Tax
17%
Property Tax
43%
TOT
4%
UUT
5%
Other Taxes
7%
Fines & Forfeitures
1%
Misc. Revenue
4%
Charges for Services
3%
Intergovernmental
1%
Transfers In
10%
Permits
5%
Economy & Inflation Impacts
•Tax receipts from service stations
continue to have strong downward
pressure on revenues in the first half of
fiscal year 2024-25
•Placentia’s third quarter tax receipts from
fuel stations was down (19.3%)
•6 of City’s top 25 sales tax generators are
fuel stations
•Price increases at restaurants altering
behavior of consumers
•Sustained high interest rates impacting
auto sales and leases
Economy & Inflation Impacts
•New businesses have opened such as Ace Hardware, Primecut Taqueria, Adamson Police Products, Dollar Tree, Ape Coffee •Announcement of closing of Walgreens in March
•Prolonged vacancy at former CVS at Kraemer & Bastanchury •Hesitancy to invest due to federal tariffs, interest rate uncertainty •National chains continue to close stores
•Denny’s
•Joann’s
Projected FY 2024/25 General Fund Revenues
Revenue Type
FY 2024/25 Adopted
Budget
FY 2024/25 Projected
Budget
Variance to
FY24/25 Adopted
Budget
Property Taxes $21,796,023 $21,796,023 0.0%
Sales & Use Taxes 8,408,000 8,333,000 (0.9%)
Other Taxes 7,896,040 8,396,040 6.3%
Permits/Licenses 2,788,900 3,003,903 7.7%
Fines & Forfeitures 485,000 575,000 18.6%
Intergovernmental 312,000 384,278 23.2%
Charges for Services 1,716,990 1,945,611 13.3%
Miscellaneous 2,129,075 2,253,777 5.9%
Total Operating Revenues $45,532,028 $46,687,632 2.5%
Transfers In 455,100 465,100 2.2%
Measure U Transfers In
Employee Retention 2,665,800 2,665,800 0.0%
Measure U Reserve 888,600 888,600 0.0%
OPEB 888,600 888,600 0.0%
Total Transfers In $4,898,100 $4,019,500 0.2%
Capital Projects Revenues -7,150,174 -
Total Resources $50,430,128 $58,745,906 16.5%
Projected FY 2024/25 General Fund Revenues
- 3,000,000 6,000,000 9,000,000 12,000,000 15,000,000 18,000,000 21,000,000 Charges for Service
Permits/Licenses
Measure U
Other Taxes
Sales Tax
Property Tax
Utility Users Tax
Transient Occupancy Tax
Franchise Taxes Budget Projected at 6/30
Notable Proposed Mid-Year Adjustments
Legal Services- $100,000
o Due to contract rate increases, legal services relating to labor negotiations and special projects administered by City Attorney
City Administrator- $480,000
o Unforeseen expenses relating to separation of former City Administrator Administrative Services-$30,500
o Increase in Information Technology (IT) professional services to support after-hour calls, network and system engineering required for current projects Development Services- $152,950
o Needed to support contract inspection services due to staff turnover and sustained high demand for inspections. Increase offset by revenue.
Notable Proposed Mid-Year Adjustments
Police- $85,000
o Needed to cover anticipated overtime in the detective unit due to a homicide investigation and uniform expenses due to a higher-than-normal number of uniforms needed for department personnel Fire & Life Safety- $266,400
o $216,000 is needed to support overtime incurred when staff were dispatched on strike team(s). This expense is offset by revenue in the same amount that is reimbursed by CalOES. o $50,000 is needed for repairs to the ladder truck
Public Works- $275,500
o $145,000 is needed to fund both phase 1 and 2 of repairs needed to the City Hall alarm and security system. o $50,545 is needed to cover the cost of fire watch services October thru December 2024 o $80,000 is needed in part-time salaries due to several employees out on long term leaves of absence
Notable Proposed Mid-Year Adjustments
General Government
o $200,000 for water
o $100,000 for electricity
o $310,500 for leave accrual payouts resulting from upcoming retirements
Proposed Staffing Changes
Community Services- ($5,800 annual cost)
o Eliminate Deputy Director of Community Services and create two Community Services Supervisor positions o Reclassification of a Management Analyst to a Community Services Supervisor o Actions will eliminate gaps in oversight and succession planning and allow site coordinators to dedicate more effort to program development Development Services- No Cost
o Reclassify Plans Examiner to Building Supervisor
o Sustained need for inspections, staff turnover and unsuccessful recruitments for Plans Examiner position. o Reduce contract inspection services expenses
Mid Year Summary
General Fund Net Operating Balance
Estimated Beginning Fund Balance
7/1/2024 $15,153,051
Projected Change in Fund Balance (4,623,710)
Projected Ending Fund Balance at 6/30/25 10,529,341
Fund Balance Designations
Non-Spendable 1,766,691
General Fund Reserve 4,838,121
Contingency Reserve 6,768,578
Unassigned Fund Balance (2,844,049)
Estimated Ending Fund Balance
6/30/25 $10,529,341
Projected Operating Expenditures 46,426,796
25% FB Target 11,606,699
General Fund Operating Reserve %18.87%
Potential Impacts on City Finances
City
Revenues
&
Expenses
Current &
Future State
Mandates
New
Development
Inflation State Budget
Labor
Negotiations
Capital &
Infrastructure
needs
FY 2025-26 Budget – Known Challenges
•Anticipated Unfunded Actuarial Liability (UAL) of $918,000 based on CalPERS returns- $471,000 increase over FY24/25
•Increased contract costs
•Unknown fiscal impacts of labor negotiations
•Funding needed for capital projects, facility maintenance, ADA improvements, Sewer and Storm Drain upgrades identified in various studies
•Placentia Centennial Celebration
•Moderate revenue increases
Next Steps
Q3 Budget Review
April 2025
Proposed FY 2025/26 Budget
Presentation
May 20, 2025
Proposed FY 2025/26 Budget
Adoption
June 3, 2025
Departments begin
preparing their individual
budgets
February Finance finalizes revenue
projections, internal service
charges and personnel expenses
April
Finance and Public
Works finalize Capital
Improvement Plan
May
City Administrator presents
Proposed Budget to Public and
City Council
May
Budget Approval
City Council
June
Fiscal Year Begins
July 1
Finance closes out prior
fiscal year
August
Finance staff and departments
monitor revenues and
expenditures
Year-round
Auditor working with Finance
staff on ACFR
December
Mid-Year Budget
Presentation to City
Council
February
Long Term Fiscal Sustainability - Strategies in Motion
•City Council directed staff to review options for long term fiscal sustainability •No interest in pursuing additional Transactions & Use Tax •Actions already in progress:
•Annual update to Comprehensive Fee Study- April 2025
•Annual update to Development Impact Fees- April 2025
•Sewer rate study- March 2025
•Nexus study underway for new Development Impact Fees (DIFs) •Americans with Disabilities Act (ADA)
•Information Technology
•Citywide facilities
•New Community Facilities District (CFD) for public safety •Negotiations in progress for additional hotel(s) and potential billboard •Analyze service delivery to maximize cost recovery
Long Term Fiscal Sustainability - Options
•Landscape Maintenance District (LMD)
•City has one LMD established in 1992 with no inflation escalator •General Fund has had to support maintenance costs originally included in the LMD due to insufficient resources
•New LMD, with a CPI adjustment included, could support landscape maintenance, irrigation, utility costs for area within the LMD including Champions Sports Park
•Would require voter approval
•Would be in addition to existing LMD assessment
•Nexus study required to calculate rates needed to support maintenance costs
Long Term Fiscal Sustainability - Options
•Transient Occupancy Tax (TOT)
•City’s current TOT rate is 10%, charged to guests of hotels and short-term rentals
•City currently receives approximately $1.8 million in TOT annually •Majority voter approval required
Additional Tax
Rate
Projected
Revenue (Annual)
1.0%$184,000
2.0%$368,000
5.0%$920,000
Long Term Fiscal Sustainability - Options
Current Orange County TOT rates
City TOT Tax Rate
Anaheim 15.0%
Buena Park 15.0%
Seal Beach 15.0%
Garden Grove 14.5%
Tustin 13.0%
La Palma 12.0%
Laguna Beach 12.0%
Stanton 12.0%
Santa Ana 11.0%
Brea 10.0%
Cypress 10.0%
Dana Point 10.0%
Fullerton 10.0%
Huntington Beach 10.0%
Laguna Hills 10.0%
Laguna Woods 10.0%
City TOT Tax Rate
Lake Forest 10.0%
Newport Beach 10.0%
Orange 10.0%
Placentia 10.0%
San Clemente 10.0%
San Juan Capistrano 10.0%
Yorba Linda 10.0%
Irvine 10.0%
Fountain Valley 9.0%
Costa Mesa 8.0%
Laguna Niguel 8.0%
Los Alamitos 8.0%
Mission Viejo 8.0%
Westminster 8.0%
Aliso Viejo 0.0%
La Habra 0.0%
Rancho Santa Margarita 0.0%
Villa Park 0.0%
Long Term Fiscal Sustainability - Options
•Reduce expenses
•Departments will be asked to reduce budgets for FY25/26, second year in a row
•Review all vacant positions and/ or reallocate staff resources •Analyze and prioritize programs and services currently provided
Questions & Comments