September 15, 2026
Finance Department
DATE: September 15, 2026
TO: Mayor Martinez and Members of the City Council
FROM: Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager, Internal Services
Emily Combs, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Gurule, Accounting Manager
Antonio Banuelos, Accounting Manager
Subject: Fiscal Year 2025 -26 Quarter 4 and Quarter 3 Financial Report and Administrative Budget Adjustments
FINANCIAL IMPACT: The following represent the impacts to the General Fund and Non-General Fund: Fiscal Year (FY) 2025-26
General Fund Revenues decrease of $370,111 and
Expenditures increase of $2,777,506; Non-General Fund
Revenues increase of $2,578,902 and Expenditures
increase of $2,684,884.
PREVIOUS COUNCIL
ACTION:
June 24, 2025
January 27, 2026
March 17, 2026
STATEMENT OF THE
ISSUE:
City staff are presenting the Fiscal Year 2025-26 Quarter 4 General Fund and Non-General Fund financial report
and administrative budget adjustments.
AGENDA
REPORT
September 15, 2026
RECOMMENDED ACTION: RECEIVE the Fiscal Year (FY) 2025-26 Quarter 4 (Q4) Financial Report for the period ending June 30, 2026,
and the attached FY 2025-26 Quarter 3 (Q3) Financial
Report for the period ending March 31, 2026; ADOPT a
resolution to APPROPRIATE proposed FY 2025-26 year-
end administrative budget adjustments; APPROPRIATE
Environmental and Community Investment Agreement
(ECIA) funds in FY 2026-27 for the Richmond Promise
Program; and PROVIDE DIRECTION regarding the
timing of the Limited-Term Revenue Community
Engagement process and its coordination with public-
safety labor negotiations and other City Council-directed plans, studies, and assessments – City Manager’s
Office/Finance Department (Shasa Curl/Emily
Combs/Mubeen Qader 510-412-2077).
DISCUSSION:
Executive Summary
City staff are presenting the preliminary Fiscal Year (FY) 2025-26 year-end financial projections and recommended administrative budget adjustments for the General Fund and Non-General Funds. The updated results incorporate higher personnel costs from recently approved labor agreements and reflect current revenue and expenditure trends as the City completes fiscal year-end close.
Unaudited preliminary year-end projections identified a $3.44 million shortfall; however, applying available interest earnings eliminates the shortfall while maintaining the 21 percent General Fund reserve and preserving $48.5 million in Limited-Term Revenue for future allocation. Despite this adjustment, core General Fund operations continue to show a deficit when the Limited-Term Revenue is excluded, reflecting staffing increases, rising benefit costs, and reliance on vacancy savings. In addition, fiscal impacts from ongoing public-safety labor negotiations are not yet known and may reduce the Limited-Term Revenue available for future allocation.
City staff request direction on how to proceed with the Limited-Term Revenue Community Engagement process given these uncertainties, and on whether related City-wide plans, studies, and assessments should continue as planned, be coordinated and streamlined, or be evaluated for possible deferral or consolidation.
FY 2025-26 Preliminary Year-End Overview
This report presents the preliminary FY 2025-26 year-end financial projections for the General Fund and Non-General Funds, covering the period from July 1, 2025, through June 30, 2026. These projections are based on activity recorded through Quarter 4 (Q4)
September 15, 2026
and are subject to change as the City completes its fiscal year-end close and audit. The City’s FY 2025-26 Quarter 3 (Q3) Financial Report, covering activity through March 31, 2026, is included as Attachment 5 for reference and is not separately summarized in this report. City staff prioritized preparation of the year-end analysis to incorporate wage and benefit costs associated with approved Memoranda of Understanding (MOUs), which had significant impacts on personnel expenditures in Q3 and Q4. Providing a consolidated year-end analysis offers a more complete and accurate representation of the City’s fiscal position than issuing a standalone Q3 update.
The preliminary year-end projections do not represent final audited results. Revenue accruals, expenditure adjustments, outstanding encumbrances, and other fiscal year- end entries may change the estimated General Fund balance and the amount of Limited-Term Revenue available for future allocation. Final results will be presented following completion of the annual audit and publication of the City’s FY 2025-26 Annual Comprehensive Financial Report (ACFR).
Economic Environment, Inflation, and Fiscal Uncertainty
The City continues to operate in an uncertain economic environment influenced by persistent inflation, federal trade and tariff policies, geopolitical conflicts, interest rates, and volatility in energy and commodity markets. These conditions affect both City revenues and expenditures and create additional uncertainty in long-term financial forecasting.
Recent inflation trends present a growing concern for the City’s fiscal position. Although inflation has moderated compared to peak levels seen in 2022, both the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) Index remain above long-term targets. CPI for the San Francisco Bay Area continues to increase on a year-over-year basis as shelter, transportation, insurance, and energy costs rise. PCE, the Federal Reserve’s preferred measure of inflation, also remains elevated and reflects continued nationwide increases in the cost of services. These inflation indicators suggest that many of the City’s operating and capital expenses may continue to rise at rates higher than historical averages.
For the City, persistent inflation affects equipment, vehicles, construction materials, contracted services, utilities, and other operating and capital costs. Many of these categories have already experienced substantial price increases, and staff do not anticipate a significant reduction in these pressures in the near term. Inflation also affects economically sensitive revenues. Changes in consumer spending, business activity, and interest rates may influence Sales and Use Tax, Business Tax, Documentary Transfer Tax, and investment earnings.
As CPI and PCE remain above long-run targets, there is an increased risk that expenditures will grow more quickly than revenues. This dynamic may intensify structural pressures on the General Fund and add uncertainty to the City’s long-term fiscal outlook. City staff will continue monitoring inflation indicators and incorporate updated economic assumptions into future financial forecasts and budget development.
September 15, 2026
Limited-Term Revenue and General Fund Reserve Position
A key issue identified in the preliminary year-end results is the effect of the City’s operating results on the amount of Limited-Term Revenue available for future allocation.
Although total General Fund revenues, including $50.0 million in Limited-Term Revenue, are estimated to exceed expenditures by $40.2 million, expenditures are estimated to exceed revenues by $9.8 million when the Limited-Term Revenue is excluded.
The Limited-Term Revenue was intended to be set aside for future allocation. Based on preliminary year-end results, the City would initially have a $3.44 million shortfall after maintaining the FY 2026-27 General Fund policy reserve of 21 percent and preserving the desired $48.5 million Limited-Term Revenue balance. However, City staff identified an additional $3.44 million in interest earnings available to support the General Fund reserve. Applying these interest earnings eliminates the projected shortfall and restores the Limited-Term Revenue balance to the desired $48.5 million, as shown in Figure 1.
Figure 1: FY 2025-26 Financial Summary based on Preliminary Year-End Results
ITEM AMOUNT
($) NOTES
FY 2025-26 Fund Balance (Reserve) (24%) 62,824,919 Beginning Fund Balance (Reserve) FY 2025-26 Preliminary Projected Revenue over Expenditures 40,234,357 Including Limited-Term Revenue and interest a. Estimated Fund Balance 103,059,276
b. Less: FY 2026-27 Policy Target Reserve (21%) 57,995,725 Based on FY 2026-27 Adopted Budget c. Limited-Term Revenue Beginning Balance 48,500,000 After Kids First Contribution of $1.5 Million d. Fund Balance Shortfall (a-b-c) (3,436,449)
Amount needed to maintain the desired
Limited-Term Revenue balance and the 21%
General Fund policy reserve
American Rescue Plan Act 2,888,372 Interest Earned needed to cover shortfall Environmental and Community Investment Agreement 548,077 Interest Earned needed to cover shortfall e. Additional Interest Earned – Other Funds 3,436,449 Needed to cover shortfall
Remaining Limited-Term Revenue Shortage (d+e) 0
The desired Limited-Term Revenue balance shown in Figure 1 is $48.5 million, representing the original $50.0 million less the $1.5 million allocated to the Kids First Initiative. The Kids First allocation represents 3 percent of the original Limited-Term Revenue and was made in accordance with applicable City Charter requirements.
Personnel Costs and Labor Agreements
Personnel costs are a significant factor affecting the General Fund’s current and long- term fiscal position. City staffing increased from 581 full-time equivalent positions in FY 2020-21 to an estimated 679 positions in FY 2025-26 as the City expanded its workforce to meet operational needs, community service demands, and mandated responsibilities. This represents an increase of 98 positions, or approximately 17 percent, over five fiscal years.
The fiscal impact of this staffing growth extends beyond salaries and wages. Personnel- related expenditures also include California Public Employees’ Retirement System (CalPERS) pension contributions, retiree healthcare and Other Post-Employment Benefits obligations, employee healthcare premiums, workers’ compensation, and other benefits. These costs are affected by actuarial valuations, healthcare increases,
September 15, 2026
inflation, annual premium adjustments, and negotiated labor agreements, resulting in sustained growth in General Fund obligations.
In FY 2025-26, the City finalized Memoranda of Understanding (MOUs) with SEIU Local 1021 (full-time and part-time), IFPTE Local 21 Mid-Management, IFPTE Local 21 Executive Management, and IAFF Local 188. The compensation adjustments under these agreements were retroactive to July 1, 2025, further increasing FY 2025-26 personnel costs.
Negotiations with the Richmond Police Officers Association, Police Management, and Fire Management remain ongoing, and the additional fiscal impacts are not reflected in the preliminary year-end projections because the final terms have not yet been determined. Once finalized, the agreements could reduce the amount of Limited-Term Revenue available for future allocation.
The City’s operating budget has grown over several fiscal years, driven in significant part by increased staffing levels and higher salary and benefit costs under negotiated labor agreements. The FY 2026-27 Adopted Budget also relies significantly on vacancy savings calculated using an assumed City-wide vacancy rate of approximately 12 percent or $16.5 million. As vacant positions are filled, including additional Police Department positions, those assumed savings will decline while ongoing personnel costs increase.
Ongoing personnel costs continue to outpace General Fund revenues, which may require use of a portion of the Limited-Term Revenue to maintain the City’s reserve target once labor agreements are finalized.
California Joint Powers Risk Management Authority (CJPRMA) Liability Program Assessment
CJPRMA has approved a supplemental liability program assessment totaling $109.8 million to eliminate negative equity across multiple program years. Richmond’s anticipated share is approximately $5.6 million, payable over ten years at roughly $562,000 annually beginning July 1, 2027. City staff will incorporate this obligation into long-term liability cost planning and will return to the City Council with payment strategy options.
Assembly Bill 1383 – Pension Reform
Assembly Bill (AB) 1383 is pending state legislation that would increase the salary cap used to calculate pension benefits and modify retirement formulas for certain public safety employees. Under current law, new public safety employees earn pension benefits based on an assumed retirement age of 57. AB 1383 would lower this age factor to 55, allowing employees to retire earlier while receiving the same percentage of benefits, and would increase the portion of salary eligible for pension calculations.
September 15, 2026
These changes are expected to increase employer pension costs by accelerating benefit payouts and expanding pensionable earnings, which may result in higher long-term liabilities for the City. Updated estimates indicate an annual fiscal impact ranging from approximately $404,000 to $1,000,000 beginning in FY 2026-27. However, the long-term cost remains uncertain and will need to be incorporated into future financial planning.
Since the City last reported on AB 1383 in May 2026, the bill has advanced significantly.
It passed the State Senate by a vote of 33-0 on August 30, 2026, and the Assembly concurred in Senate amendments the same day. The bill is now enrolled and awaiting action by the Governor. Given its continued progression through the legislative process, City staff will continue to monitor its status and evaluate the potential impact on future CalPERS pension costs.
Requested City Council Direction Regarding the Limited-Term Revenue Community Engagement Process
On January 27, 2026, the City Council directed City staff to issue a request for proposals for community engagement regarding the future use of the Limited-Term Revenue. On April 28, 2026, the City Council authorized the City Manager and City Attorney to negotiate and execute a contract with Dalberg Advisors to conduct the engagement process.
Since that authorization, the City’s preliminary year-end projections have been updated to reflect the City’s current financial position. Based on these projections, the City has identified sufficient resources to maintain the desired $48.5 million Limited-Term Revenue balance and its 21 percent General Fund reserve.
Given the ongoing public-safety labor negotiations and other emerging fiscal obligations including increased liability assessments, potential pension cost increases, and other City Council funding priorities, uncertainty remains regarding the amount of Limited- Term Revenue ultimately available for future allocation.
Accordingly, City staff is requesting City Council direction regarding whether to complete the pending public-safety labor negotiations before commencing the Limited - Term Revenue Community Engagement process or to proceed with both efforts concurrently.
City staff is also requesting direction regarding related plans, studies, and assessments currently in progress and referenced below, including whether those efforts should continue as planned, be coordinated and streamlined to reduce duplication, or be paused pending further City Council direction.
September 15, 2026
Coordination of Related City-wide Initiatives
The Limited-Term Revenue Community Engagement process would occur alongside several other assessments, studies, planning efforts, and community-engagement initiatives. On July 28, 2026, City staff presented the City Council with an update on these efforts and opportunities for improved coordination.
The July 28, 2026, report identified several challenges associated with conducting multiple efforts concurrently, including overlapping timelines, duplicative outreach, community fatigue, consultant coordination, and demands on City staff capacity. It also identified opportunities to coordinate engagement activities, share information across departments, improve sequencing, and reduce duplication. Many of the efforts are driven by legal mandates, funding requirements, operational needs, or prior City Council direction and may not be appropriate to delay.
* Items marked as required reflect mandates established by law, regulation, or the City Charter.
Facility Condition Assessment (already underway)
Sea Level Rise Adaptation Plan (state law) *
Mental Health Assessment
Port Economic Impact Study
Port Offshore Wind Study (grant-funded)
Limited-Term Revenue Funds Assessment
Facility Needs Assessment Plan
Black Resiliency Assessment
Richmond Fund for Children and Youth Assessment (City Charter) * HUD Annual Plan (federal regulation) *
City Asset Plan
General Plan Update (state law/Richmond Municipal Code) * Parks Master Plan
City of Richmond Standard Plans and Specifications
City of Richmond Engineering Design Standards Manual
Long Range Transportation Planning (in progress)
Blue Curb Policy Development (in progress)
Storm Rate Study (in progress)
Keller Beach Sewer Public Outreach (in progress)
ADA Transition Plan (in progress)
Streetlight Master Plan (in progress)
The City Council may also direct City staff to implement the coordination strategies identified in the July 28, 2026, staff report, including maintaining a City-wide project timeline, coordinating community outreach, reviewing consultant scopes for areas of overlap, sharing information across departments, and aligning project schedules and City Council presentations when appropriate. These strategies are intended to improve coordination, reduce duplication, and limit community and staff fatigue.
September 15, 2026
Many of these efforts are required by law, tied to funding or contractual requirements, necessary for City operations, or undertaken at the direction of the City Council. Any decision to modify, defer, consolidate, or pause an effort should therefore consider the applicable legal, funding, contractual, and operational implications.
Options for City Council Consideration
City staff recommend that the City Council provide direction by selecting one of the following options:
Option A: Defer the Limited-Term Revenue Community Engagement process until completion of the Facility Needs Assessment Plan and evaluate opportunities to pause, consolidate, coordinate, or streamline the other City Council-directed plans, studies, and assessments.
Option B: Defer the Limited-Term Revenue Community Engagement process until public-safety labor negotiations are completed. Other City Council-directed plans, studies, and assessments would continue as planned.
Option C: Proceed with the Limited-Term Revenue Community Engagement process concurrently with public-safety labor negotiations and the other City Council- directed plans, studies, and assessments.
FY 2025-26 Grant Portfolio
During FY 2025-26, the City of Richmond managed a diverse portfolio of grants supporting critical services, infrastructure, and community development. As of June 2026, the City administered over $336 million in grant awards across multiple funds and departments. The City is anticipating upcoming grant awards totaling $31.4 million, and City staff have submitted applications for new grants totaling approximately $86.5 million. This robust grant activity reflects the City’s ongoing commitment to leveraging external funding for local priorities, including public safety, youth and workforce development, housing, transportation, environmental sustainability, and neighborhood revitalization.
The City of Richmond’s grant portfolio for FY 2025-26 demonstrates strong fiscal stewardship, strategic alignment with community needs, and effective leveraging of external resources. As the City enters FY 2026-27, continued focus on timely project delivery, compliance, and stakeholder engagement will be essential to sustaining this momentum and maximizing the impact of grant-funded programs.
FY 2025–26 Q4 Capital Improvement Program Highlights (April–June 2026)
During Q4, the City advanced and completed several key capital projects. Public Works filed the Notice of Completion for the 7th Street Bike Lane Improvement Project, completed the Automated Transit Network Study, and advanced the 2026 Arterial Base Repair Project design to near completion. Water Resource Recovery completed the
September 15, 2026
Influent Pump Station Slide Gate Replacement, while the Greening the Yellow Brick Road project concluded its plant-establishment and grant-performance periods and entered closeout.
Construction began on the Richmond Main Library Infrastructure Project, Area FM Cap Project, and Bridge Preventive Maintenance Project at Richmond Parkway and the 13th Street/Pennsylvania Avenue overpass. The City also awarded the Phase 3 construction contract for Richmond Art and Lighting improvements at the San Pablo, Barrett, and Macdonald underpasses along Interstate 80. The Shields-Reid Park Revitalization Project approached completion, with its reopening held in July 2026.
Operations continued paving local streets, constructing curb ramps for the Rubberized Cape Seal Project, addressing urgent accessibility needs near Fire Station 67, and shaving raised sidewalks adjacent to parks. In conjunction with the paving program, Public Works implemented crosswalk-daylighting improvements along portions of Richmond’s High-Injury Corridor Network.
Through the Streetlight Program, Public Works installed 11 solar lights: two at the Potrero Circle illegal-dumping site, three along Clinton Avenue at Tiller Park, and six at the 27th Street parking lot. The next phase is planned to include lighting improvements at Nicholl Park, Booker T. Anderson Park, and the northern section of Carlson Boulevard.
Public Works also completed its 23rd Street Corridor Y-PLAN collaboration with Richmond High School and UC Berkeley, receiving youth-centered transportation-safety recommendations for future corridor planning.
Environmental and Community Investment Agreement (ECIA) Transportation – Approximately $1.9 Million Remaining
The Environmental and Community Investment Agreement (ECIA) was established to provide long-term investment in community programs, competitive community grants, and community-based greenhouse gas reduction programs over a ten-year period. As the program concludes, only limited balances remain available for City Council appropriation.
Approximately $1.9 million in ECIA funding remains available and may be allocated to qualifying projects or community initiatives in alignment with the ECIA’s authorized investment categories. This remaining balance may also be needed to address emerging funding gaps in priority mobility programs. Richmond MOVES currently requires supplemental resources to sustain on-demand transit operations as ECIA support winds down, and development of the E-Bike Lending Library has an identified construction shortfall of approximately $2.2 million needed to unlock additional grant funding.
September 15, 2026
City staff will return to the City Council with specific recommendations regarding use of the remaining ECIA Transportation balance as part of broader mobility funding strategies.
General Fund
Preliminary FY 2025-26 year-end General Fund revenues are projected to total $311.8 million, or 101 percent of the revised budget. General Fund expenditures are projected to total $268.4 million, or 98 percent of the revised budget. After incorporating $3.1 million in proposed year-end adjustments, General Fund revenues are projected to exceed expenditures by $40.2 million, as shown in Figure 2.
Figure 2: Preliminary General Fund Revenue and Expenditures FY2025-26, Quarter 4
GENERAL FUND
FY 2025-26
ORIGINAL
BUDGET ($)
FY 2025-26 REVISED
BUDGET ($)
ESTIMATED
YEAR-END
ACTUALS ($)
PERCENT OF
REVISED
BUDGET
Revenue 258,553,519 259,965,614 261,765,629 101%
Limited-Term Revenue 50,000,000 50,000,000 50,000,000 100% Total Revenues 308,553,519 309,965,614 311,765,629 101%
Total Expenditures 260,053,519 274,593,913 268,383,655 98%
General Fund Net
+Surplus/(-Deficit) 48,500,000 35,371,701 43,381,974 Less: Year-End Adjustments (Figure 11) (3,147,617)
Revised General Fund Net
+Surplus/(-Deficit) 48,500,000 35,371,701 40,234,357
Although total General Fund revenues, including $50.0 million in Limited-Term Revenue, are estimated to exceed expenditures by $40.2 million, expenditures are estimated to exceed revenues by $9.8 million when the Limited Term Revenue is excluded.
General Fund Revenues
As shown in Figures 3 and 4, preliminary FY 2025-26 General Fund revenues are projected to total approximately $311.8 million, or 101 percent of the revised budget.
Property Tax, Utility Users Tax, Other Taxes, and Charges for Services are projected to end the fiscal year below their respective revised budgets, while most other revenue categories are projected to meet or exceed budget.
September 15, 2026
Figure 3: Estimated General Fund Revenue FY2025-26 Quarter 4
REVENUE CATEGORIES
FY 2025-26
ORIGINAL
BUDGET ($)
FY 2025-26
REVISED
BUDGET ($)
ESTIMATED
YEAR-END
ACTUALS ($)
VARIANCE
Property Taxes 58,329,291 58,329,291 56,545,101 97%
Sales & Use Tax 60,163,807 60,163,807 62,491,119 104% Utility Users Tax 64,943,670 66,351,265 64,214,658 97% Other Taxes 28,399,659 28,399,659 27,606,047 97%
Licenses, Permits & Fees 17,274,036 17,274,036 18,277,250 106% Fines & Forfeitures 200,000 200,000 1,382,583 691%
Interest Income 3,030,545 3,030,545 4,715,902 156%
Charges For Services 3,724,495 3,724,495 3,190,694 86% Other Revenue 50,167,500 50,172,000 50,770,164 101%
Rental Income 791,157 791,157 879,227 111%
Intergovernmental State Taxes 150,000 150,000 177,196 118% Intergovernmental State Grant 180,000 180,000 321,295 178% Intergovernmental Other Grant 290,000 290,000 339,958 117% Proceeds From Sale of Property 15,000 15,000 476 3%
Loan/Bond Proceeds 40,400 40,400 - 0%
Operating Transfers In 20,853,959 20,853,959 20,853,959 100% Total Revenues 308,553,519 309,965,614 311,765,629 101%
Figure 4: FY 2025-26 Major General Fund Revenues
General Fund Revenue Variances
Property Tax - Revenue is expected to total $56.5 million, which is $1.8 million, or
3.1 percent, below the revised budget of $58.3 million. This shortfall is mainly due to Floating Lien revenue. The City received $139,000 compared to the budget of $1.7 million. Contra Costa County attributed the lower collections to staffing shortages that delayed lien processing and a slow real estate market.
Sales & Use Tax – Revenue is projected to total $62.5 million, which is $2.3 million, or 3.9 percent, above the revised budget of $60.2 million. The increase is mainly due to strong sales from major online retailers. Established retailers, including Costco, Target, Home Depot, and Walmart also continue to make substantial contributions to this revenue source.
$20.9
$61.8
$18.3
$27.6
$64.2
$62.5
$56.5
$20.9
$58.6
$17.3
$28.4
$66.4
$60.2
$58.3
$- $20 $40 $60
Operating Transfers In
Other Revenue
Licenses, Permits & Fees
Other Taxes
Utility Users Tax
Sales & Use Tax
Property Taxes
Millions
Major Revenue Categories
FY 2025-26 Revised Budget Estimated Year-End Actuals
September 15, 2026
Utility Users Tax (UUT) – UUT revenue, including cable television, gas, electricity, and telecommunications, is projected to total $64.2 million. This amount is $2.1 million, or 3.2 percent, below the revised budget of $66.3 million. The shortfall is mainly due to lower payments from Pacific Gas & Electric (PG&E). Electricity rates decreased by approximately 2.5 percent effective March 1, and gas rates decreased by approximately 3.0 percent effective January 1, resulting in lower taxable utility revenues.
Other Taxes – Revenue is projected to total $27.6 million, which is $794,000, or 2.8 percent, below the revised budget of $28.4 million. The shortfall is mainly due to Documentary Transfer Tax, a volatile revenue source collected by Contra Costa County on transfers of real property. Monthly collections ranged from $300,000 up to $7 million. FY 2025-26 Documentary Transfer Tax revenue is projected to total $12.8 million, which is $812,000, or 6 percent, below the revised budget.
Licenses, Permits, and Fees (including Business License Tax) – Revenue is projected to total $18.3 million, an increase of $1 million, or 5.8 percent, above the revised budget of $17.3 million. The increase is largely due to Business Tax revenue, which is projected to total approximately $15.8 million, or $823,000 above the revised budget. FY 2025-26 represents the fourth full fiscal year in which the Business Tax has been calculated based on gross receipts pursuant to Measure U.
Figure 5 shows the distribution of FY 2025-26 Business Tax revenue by taxpayer ranking. Business Tax revenue is projected to total approximately $15.8 million. The top 50 taxpayers account for approximately 62.5 percent of the total, while the top 500 account for approximately 89.4 percent. The remaining taxpayers account for approximately 10.6 percent.
Figure 5: FY 2025-2026 Business Tax Percentage Paid by Businesses BUSINESS TAX ACCOUNTS FY 2025-26 ($) PERCENTAGE CUMULATIVE
PERCENTAGE
1 to 25 8,501,365 53.96% 53.96%
26 to 50 1,350,530 8.57% 62.53%
51 to 100 1,509,122 9.58% 72.11%
101 to 250 1,758,437 11.16% 83.27%
251 to 500 961,182 6.10% 89.37%
501 to 1000 698,154 4.43% 93.80%
1001 to 6593 976,903 6.20% 100.00%
ALL 15,755,694 100.00%
September 15, 2026
Figure 6: Business Tax Paid by Business Class
All Other Revenue – Revenue from all remaining General Fund categories is projected to total $61.8 million, an increase of $3.2 million, or 5.4 percent, above the revised budget of $58.7 million. This category includes Interest Income, Fines & Forfeitures, Charges for Services, Rental Income, Grants, Loan & Bond Proceeds, and Proceeds from the Sale of Property. The increase is primarily driven by higher Interest Income exceeding budget by approximately $1.7 million because of higher interest rates and increased funds available for investment. Fines and Forfeitures are also projected to exceed budget by approximately $1.2 million, primarily because of the Police Department’s new citation-issuing software and related processes.
Operating Transfers In – Revenue is projected to total approximately $20.9 million, consistent with the revised budget. This category includes a transfer from the Marina Fund for project-management costs and a transfer from the Pension Tax Override Fund (PTORS) to support pension obligations. No budget variance is projected.
General Fund Expenditures
Preliminary FY 2025-26 General Fund expenditures are projected to total $268.4 million, or 98 percent of the revised budget. This is $6.2 million below the revised budget of $274.6 million. Figure 7 compares the original budget, revised budget, and preliminary year-end projections by expenditure category, while Figure 8 illustrates the major General Fund expenditure categories.
Salaries and Wages and Fringe Benefits are projected to exceed the revised budget, primarily because of wage and benefit increases resulting from City Council-approved Memoranda of Understanding (MOUs) with the City’s bargaining units, as described in more detail below. These personnel costs are offset by lower projected expenditures in Professional and Administrative Services, Other Operating Expenditures, Equipment and Contract Services, and several other categories.
Class A: Retail Sales
21%
Class C:
Manufacturing
21%
Class F:
Construction
Contractors
7%
Class G: Business and Personal Services
6%
Class H: Professional
Services
16%
Class K1 & K2:
Rentals
21%
All Other Classes
8%
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Figure 7: Preliminary General Fund Expenditures FY 2025-26 Quarter 4
EXPENDITURE CATEGORIES
FY 2025-26
ORIGINAL
BUDGET ($)
FY 2025-26
REVISED
BUDGET ($)
ESTIMATED
YEAR-END
ACTUALS ($)
VARIANCE
Salaries & Wages 96,762,515 96,448,399 98,979,548 103% Fringe Benefits 74,157,128 74,827,597 77,701,272 104% Professional & Administrative 26,354,296 27,998,611 19,086,088 68% Other Operating 9,511,051 8,548,941 7,457,923 87% Utilities 7,265,830 7,996,981 7,774,128 97%
Equipment & Contract Services 5,513,366 5,106,409 4,284,295 84% Provision for Insurance Loss 46,500 46,500 41,058 88% Cost Pool 21,145,184 21,145,184 21,145,184 100%
Asset/Capital Outlay 2,842,986 3,953,886 3,531,275 89% Debt Service Expenditure 775,647 775,647 775,694 100% Cost Plan Reimbursement (3,362,171) (3,362,171) (3,498,921) 104% Grant Expenditures 34,497 - (1,817) -
Operating Transfers Out 19,006,690 31,107,929 31,107,929 100% Total Expenditures 260,053,519 274,593,913 268,383,655 98%
Figure 8: FY 2025-26 Major General Fund Expenditures
General Fund Expenditure Variances
Salaries and Wages – The category includes compensation for both full-time and part-time personnel, overtime, and other pay types. Expenditures are projected to total $99.0 million, which is $2.5 million, or 3 percent, above the revised budget. The increase is primarily due to costs associated with negotiated MOUs with SEIU 1021, IFPTE 21 Mid-Management, IFPTE 21 Executive Management, and IAFF Local 188 that were not included in the revised budget.
Fringe Benefits – This category includes medical, dental, vision coverage; workers’ compensation; CalPERS pension contributions; Other Post Employment Benefits (OPEB); and other employee benefits. Expenditures are projected to total $77.7 million, which is $2.9 million, or 4 percent, above the revised budget. The increase is primarily due to benefit costs associated with negotiated MOUs, including higher $96.4
$74.8
$28.0
$8.6
$8.0
$4.0
$5.1
$21.1
$0.8
$(3.4)
$31.1
$99.0
$77.7
$19.1
$7.5
$7.8
$3.5
$4.3
$21.1
$0.8
$(3.5)
$31.1
$(5) $45 $95
Salaries & Wages
Fringe Benefits
Professional & Administrative
Other Operating
Utilities
Asset/Capital Outlay
Equipment & Contract Services
Cost Pool
Debt Service Expenditure
Cost Plan Reimbursement
Transfers Out
Millions
Major Expenditure Categories
FY 2025-26 Revised Budget Estimated Year-End Actuals
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employer Medicare taxes and additional CalPERS contributions.
Professional & Administrative Services – This category includes professional and consulting services, legal services, computer software maintenance, security services, and contractual obligations, such as animal control services. Expenditures are projected to total $19.1 million, or 68 percent of the revised budget. The lower spending is primarily within the Office of Neighborhood Safety, Economic Development, and non-departmental accounts. A portion of the remaining budget supports ongoing initiatives including Immigration Legal Services, Black Resiliency Fund, and Small Business Support, for which unspent appropriations will carry forward to the next fiscal year.
Other Operating – This category includes copier leases, office supplies, and other items. Expenditures are projected to total $7.5 million, or 87 percent of the revised budget. Lower spending reflects fewer supply purchases across the Police Department, Office of Neighborhood Safety, and Community Crisis Response Program, including reduced needs for office materials, safety equipment, rentals, and uniforms.
Utilities – This category includes gas, electricity, water, refuse, telephone, and internet services. Expenditures are projected to total $7.8 million, or 97 percent of the revised budget. Higher telephone and internet costs are offset by savings in electricity, water, and refuse services.
Equipment & Contract Services - This category includes equipment and maintenance/repair services. Expenditures are projected to total $4.3 million, or 84 percent of the revised budget. The difference is primarily due to lower projected expenditures for repair, maintenance, and software-related services.
Cost Pool – This category includes vehicle replacement, general liability, and Civic Center debt. These costs are charged to departments monthly based on budgeted allocations. Year-end expenditures are projected to match the revised budget.
Asset/Capital Outlay – This category includes capital purchases and major facility and infrastructure upgrades. Expenditures are projected to total $3.5 million, or 89 percent of the revised budget. The difference is primarily due to lower projected expenditures for computer hardware.
Debt Service – This category includes debt service payments made in accordance with the City’s debt service schedules and capital lease agreements. Year-end expenditures are projected to match the revised budget.
Cost Plan Reimbursements – This category includes administrative overhead reimbursements from Non-General Fund programs for services provided by internal support departments, such as Human Resources, Finance, and Information Technology. These reimbursements are recorded monthly in accordance with budgeted allocations and offset General Fund expenditures. These transactions are being reviewed as part of the fiscal year-end closing process.
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Operating Transfers Out – This category includes transfers from the General Fund to Non-General Funds for operating subsidies and a portion of debt service costs.
Year-end transfers are projected to match the revised budget.
Non-General Funds
Non-General Fund Revenues
Preliminary FY 2025-26 Non-General Fund revenues are projected to total approximately $224.0 million, or 66 percent of the revised budget. The difference primarily reflects the timing of revenue recognition for multi-year grants. In many grant- funded programs, the full grant award is included in the budget, while revenue is recognized or reimbursed as eligible expenditures are incurred over the grant period.
Figure 9 summarizes projected revenues by fund type, and Attachment 1 provides additional detail by fund.
Figure 9: Preliminary Non-General Fund Revenues, FY 2025-26, Quarter 4
FUND TYPE
FY 2025-26
ORIGINAL
BUDGET ($)
FY 2025-26
REVISED BUDGET
($)
ESTIMATED
YEAR-END
ACTUALS ($)
VARIANCE
Capital Improvement Funds 55,010,627 102,459,559 35,006,915 34% Debt Service Funds 19,142,975 19,142,975 19,302,088 101% Enterprise Funds 44,653,962 55,759,572 45,530,855 82% Housing Funds 2,109,250 2,109,250 1,323,047 63%
Housing Authority Funds 4,485,250 4,485,250 4,403,578 98% Internal Service Funds 34,720,066 34,720,066 36,871,636 106% Other Operations Funds 19,257,210 25,871,067 19,770,892 76% Special Revenue Funds 85,698,068 93,126,915 61,809,331 66% Total Revenues 265,077,407 337,674,653 224,018,341 66%
Capital Improvement Funds – Revenues are projected at 34 percent of the budget.
The difference primarily reflects multi-year grant awards that are fully included in the budget but recognized as eligible expenditures are incurred. Pending reimbursements in the Outside-Funded Services and Engineering Services Grants funds also contribute to the difference.
Debt Service Funds – Revenues are projected at 101 percent of the revised budget, primarily due to higher interest earnings.
Enterprise Funds – Revenues are at 82 percent of the revised budget, largely due to the timing of receiving grant funds in the Port Fund and Stormwater Fund. The KCRT Fund continues to experience declining revenues as users shift from traditional cable/television services to subscription-based platforms.
Housing Funds – Revenues are projected at 63 percent of the revised budget, primarily due to reduced Developer Housing In-Lieu Fee collections.
Richmond Housing Authority (RHA) – Revenues are projected at 98 percent of the revised budget, primarily due to lower than budgeted General Fund subsidy to the RHA Nystrom Village Fund. The reduced subsidy reflects lower projected
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expenditures across most categories within this fund.
Internal Service Funds – Revenues are projected at 106 percent of the revised budget, primarily due to higher interest earnings.
Other Operations Funds – Revenues are projected at 76 percent of the revised budget. The significant variance is due to grant-funded program revenues, where reimbursements are typically received after expenditures are incurred, and any remaining balances are carried over into the following year.
Special Revenue Funds – Revenue are projected at 66 percent of the revised budget. The difference primarily reflects several large multi-year grants, including the Transformative Climate Communities Grant, Encampment Resolution Funds Rounds 2 and 3, and the Homekey Program. The full grant awards are included in the budget at the beginning of the grant period, while revenue is recognized as eligible expenditures are incurred throughout the grant period.
Non-General Fund Expenditures
Preliminary FY 2025-26 Non-General Fund expenditures are projected to total $292.6 million, or 60 percent of the revised budget. Many Non-General Fund budgets include multi-year capital and grant-funded projects and programs, where spending occurs over an extended period rather than within a single fiscal year. As a result, any unspent appropriations typically roll forward into the next fiscal year and remain available until the related projects or programs are fully completed. Figure 10 summarizes projected expenditures by fund type, and Attachment 1 provides additional detail by fund.
Figure 10: Estimated Non-General Fund Expenditures, FY 2025-26, Quarter 4
FUND TYPE
FY 2025-26
ORIGINAL
BUDGET ($)
FY 2025-26
REVISED BUDGET
($)
ESTIMATED
YEAR-END
ACTUALS ($)
VARIANCE
Capital Improvement Funds 109,470,186 166,799,281 66,529,056 40% Debt Service Funds 19,232,511 19,232,511 19,228,502 100% Enterprise Funds 72,428,398 88,437,680 56,509,666 64%
Housing Funds 4,368,368 4,730,459 2,884,052 61%
Housing Authority Funds 4,494,250 4,494,250 4,336,611 96% Internal Service Funds 46,171,816 52,935,289 34,739,811 66% Other Operations Funds 25,703,833 31,141,190 22,689,588 73% Special Revenue Funds 101,925,131 123,795,676 85,646,722 69% Total Expenditures 383,794,493 491,566,336 292,564,009 60%
Capital Improvement Funds – Expenditures are projected at 40 percent of the revised budget, primarily due to capital projects that span multiple fiscal years.
Unspent project appropriations generally carry forward to the following fiscal year.
Debt Service Funds – Expenditures are 100 percent of the revised budget. These funds support the City’s Civic Center Bonds and Pension Obligation Bonds.
Enterprise funds – Expenditures are at 64 percent of the revised budget, primarily due to the timing of multi-year capital projects for the Wastewater Fund and Port of
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Richmond funds. Unspent project appropriations generally carry forward to the following fiscal year.
Housing Funds – Expenditures are projected at 61 percent of the revised budget, primarily due to fewer loans being issued under the Home Improvement Loan Program in the Successor Agency Housing Fund.
Richmond Housing Authority (RHA) Funds – Expenditures are projected at 96 percent of the revised budget, primarily due to lower projected expenditures in the Nevin Plaza, Nystrom Village, and RHA Capital funds.
Internal Service Funds – Expenditures are projected at 66 percent of the revised budget, primarily due to equipment purchases that are expected to occur in the following fiscal year. The related appropriations are expected to carry forward.
Other Operations Funds – Expenditures are projected at 73 percent of the revised budget. Several grant-funded programs in this category span multiple fiscal years, and any remaining grant balances are expected to be carried forward into the following fiscal year.
Special Revenue funds – Expenditures are projected at 69 percent of the revised budget, primarily due to several large multi-year grants and programs, including American Rescue Plan Act-funded projects, the Transformative Climate Communities, Encampment Resolution Fund, and the Environmental Community Investment Agreement. Remaining appropriations for these activities generally are carried forward throughout the applicable grant or program period.
Quarter 4 Budget Adjustments
The proposed FY 2025-26 administrative budget adjustments are necessary to address year-end funding shortfalls and align budgeted amounts with projected financial activity.
Without these adjustments, the Equipment Services and KCRT funds would not have sufficient resources to meet their FY 2025-26 obligations, and the General Fund budget would continue to reflect Pension Tax Override revenue that is no longer expected to be received. City staff therefore recommend adjustments with a total General Fund impact of approximately $3.1 million, consisting of a $2.8 million increase in General Fund expenditures and a $370,111 decrease in General Fund revenues, as summarized in Figure 11.
Equipment Services: A General Fund subsidy of $2.2 million is necessary to address higher-than-budgeted equipment costs resulting from inflation and cost escalation.
Pension Tax Override: The assessed value of former Successor Agency properties was lower than projected, reducing the revenue available for transfer to the General Fund to offset pension costs. A $370,111 reduction in General Fund revenue, with corresponding adjustments in the Pension Tax Override Fund, is necessary to align
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the budget with projected year-end activity.
KCRT: KCRT has historically relied on cable franchise fees and Public, Educational, and Government access fees tied to cable-provider revenues and subscriber levels.
As consumers increasingly shift from traditional cable television to streaming services, cable subscriptions and the related fee revenues have declined. This industry-wide change has reduced KCRT’s ongoing revenue base and is projected to result in a negative year-end cash position. A General Fund subsidy of $577,506 is therefore necessary to support current-year obligations and address the projected shortfall.
Figure 11: Proposed FY 2025-26 General Fund Administrative Budget Adjustments
ADMINISTRATIVE ADJUSTMENTS
– GENERAL FUND AMOUNT ($)
Equipment Services - Cost increases due to inflation and cost escalation 2,200,000 Pension Tax Override true-up (lower assessed value) 370,111 KCRT General Fund Subsidy (Negative Fund Balance) 577,506 Total General Fund Impact 3,147,617
City staff also recommend administrative adjustments to align the General Fund and Non-General Fund budget with preliminary FY 2025-26 year-end projections. Figure 12 summarizes the proposed revenue and expenditure adjustments by fund, and Attachment 2 provides additional detail.
Figure 12: Proposed FY 2025-26 Quarter 4 Administrative Budget Adjustments
FUND TYPE FUND DESCRIPTION REVENUE
($)
EXPENDITURE
($)
General Fund General Fund (370,111) 2,777,506
Capital Improvement Impact Fee Parks/PW 3,528 106
Capital Improvement Impact Fee Traffic 17,310 519
Capital Improvement Impact Fee Fire 3,725 112
Capital Improvement Impact Fee Police 4,401 132
Capital Improvement Impact Fee Comm/Aquatic 21,371 641
Capital Improvement Impact Fee Open Park 75,566 2,267
Capital Improvement Impact Fee Library 20,897 627
Capital Improvement Impact Fee Storm Drainage 2,316 69
Capital Improvement Impact Fee Wastewater 17,398 522
Enterprise Fund KCRT 577,506 -
Enterprise Fund Wastewater - 300,000
Enterprise Fund Stormwater - 550,000
Other Operations CR-Planning and Building 4,995 -
Other Operations Secured Pension Override (370,111) (370,111) Internal Services Equipment Services 2,200,000 2,200,000 Total 2,208,790 5,462,390
Richmond Promise Funding Recommendation
At its May 26, 2026 meeting, the City Council unanimously directed City staff to explore funding options to sustain the Richmond Promise scholarship program following the conclusion of the Environmental and Community Investment Agreement (ECIA), which originally supported the program from FY 2014-15 through FY 2024-25.
Based on updated preliminary year-end projections for FY 2025-26, City staff identified sufficient interest earnings available to support the General Fund reserve requirements
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and maintain the desired Limited-Term Revenue balance. With these reserve targets met, the City is able to appropriate $2.2 million in FY 2026-27 from ECIA interest earnings to support the Richmond Promise program without drawing down Limited-Term Revenue or relying on residual ECIA balances. This $2.2 million appropriation is funded entirely by ECIA interest earnings and is not part of the $80 million in original allocation the City Council approved for specified ECIA programs.
The recommended appropriation will ensure continued scholarship availability and support full matriculation for additional cohorts of Richmond students through 2027, while a long-term funding strategy is determined. This level of investment aligns with the anchor funding threshold previously reviewed by the City Council and maintains the City’s ongoing commitment to expanding college access and promoting post-secondary achievement for Richmond youth.
Recommended Action
City staff recommends that the City Council approve the proposed General Fund and Non-General Fund budget adjustments and provide direction on the following options:
Option A: Defer the Limited-Term Revenue Community Engagement process until completion of the Facility Needs Assessment Plan and evaluate opportunities to pause, consolidate, coordinate, or streamline the other City Council-directed plans, studies, and assessments.
Option B: Defer the Limited-Term Revenue Community Engagement process until public-safety labor negotiations are completed. Other City Council-directed plans, studies, and assessments would continue as planned.
Option C: Proceed with the Limited-Term Revenue Community Engagement process concurrently with public-safety labor negotiations and the other City Council- directed plans, studies, and assessments.
Other Pending Finance Items
Cannabis Business Tax Performance and Sector Conditions
City staff completed an informational review of Richmond’s licensed cannabis sector in response to prior City Council direction. The assessment found that the sector remains generally stable, and no immediate policy or revenue-related changes are recommended at this time. In FY 2024-25, the City received $1,199,670 in Business License Tax revenue from 13 licensed cannabis businesses, reflecting continued participation and overall compliance among operators.
Only two operators requested temporary payment plans due to short-term financial challenges. One has already made successful payments toward its outstanding balance. As of the latest review, only one business, representing approximately 7 percent of the sector, was not fully current on obligations. Broader financial distress was
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not observed, and most operators continue to meet their tax and regulatory requirements despite statewide market pressures that include regulatory changes, competition, and industry-wide cost burdens.
Given this limited level of financial difficulty, City staff does not recommend changes to cannabis related taxes, fees, or regulatory structures at this time. Premature adjustments could reduce City revenue without addressing a sector-wide issue. City staff will continue monitoring cannabis business activity, compliance trends, and evolving state regulations. City staff will return to the City Council with updated analysis if conditions change in a way that affects multiple operators or indicates a broader trend.
Next Steps
Following City Council direction, City staff will implement the selected approach for the Limited-Term Revenue Community Engagement process and related studies and assessments. If approved, the proposed administrative budget adjustments will be incorporated into the FY 2025-26 year-end closing process.
City staff will also continue working with the City’s independent auditors to complete the FY 2025-26 annual audit and finalize the Annual Comprehensive Financial Report (ACFR). The audited financial statements, ACFR, and final General Fund year-end results are expected to be presented to the City Council in March 2027.
DOCUMENTS ATTACHED:
Attachment 1 – Estimated Fiscal Year 2025-26 General Fund and Non-General Funds Revenues and Expenditures
Attachment 2 – Fiscal Year 2025-26 Budget Adjustments
Attachment 3 – Resolution – FY 2025-26 Year-End Budget Adjustments Attachment 4 – Presentation Fiscal Year 2025-26 Financial Report and Budget Adjustments
Attachment 5 – Fiscal Year 2025-26 Quarter 3 Report
Attachment 6 – City Council-Directed Priorities and Work Efforts List Attachment 7 – City Council Strategic Goals and Priorities Attachment 8 – City Council Agenda Item Follow-up 2025-Present