RESOLUTION NO. 2026-030
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE
CITY OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING
THE CITY MANAGER TO EXECUTE AMENDMENTS TO THE
REGIONAL PARTNERSHIP AGREEMENTS FOR ANIMAL
SHELTERING SERVICES WITH THE CITIES OF COLTON,
FONTANA, GRAND TERRACE, LOMA LINDA, AND RIALTO TO
PROVIDE FOR FULL COST RECOVERY INCLUDING
INDIRECT COSTS, STAFFING COSTS ASSOCIATED WITH ALL
FULL-TIME EMPLOYEES, SEASONAL TEMPORARY
ASSIGNMENT STAFF, INCLUDING PER DIEM
VETERINARIANS, AND THE APPLICATION OF A 3%
CONSUMER PRICE INDEX ADJUSTMENT.
WHEREAS, on December 6, 2023, the Mayor and City Council authorized the City Manager to finalize and execute Regional Partnership Agreements for animal sheltering services with the Cities of Colton, Fontana, Grand Terrace, Loma Linda, and Rialto; and WHEREAS, pursuant to these agreements, the City of San Bernardino Department of Animal Services began providing animal sheltering services to the partner jurisdictions, resulting in increased intake volumes and operational demands at the City’s animal shelter; and WHEREAS, the original agreements anticipated the addition of thirty (30) new positions to support the increased demand associated with the regional partnership; and WHEREAS, after reviewing a full year of operational and financial data associated with the regional partnership, the Department of Animal Services determined that the original cost allocation methodology does not fully capture the total cost of providing regional sheltering services; and WHEREAS, the Department of Animal Services has evaluated shelter operations and determined that animals originating from partner jurisdictions are supported by the full staffing structure of the shelter, including all full -time employees, seasonal temporary assignment staff (SBTS), and per diem veterinarians; and
WHEREAS, the Department recommends amending the existing agreements to allow for full cost recovery by allocating salary and benefit costs associated with all staff involved in shelter operations rather than limiting the allocation to only the additional positions originally added for the partnership; and
WHEREAS, the Department also recommends incorporating indirect costs associated with providing regional sheltering services, including administrative and operational support provided by other City departments such as Human Resources, Finance, Payroll, and Facilities, consistent with the City’s Cost of Fee Study completed by Matrix Consulting Group in January 2023; and
Packet Page. 1088
Resolution No. 2026-030
Resolution No. 2026-030
March 18, 2026
WHEREAS, the Department further recommends the application of a 3% Consumer Price Index (CPI) adjustment to annual year -end reconciliation billing in order to account for inflationary increases in operational costs and maintain long- term fiscal sustainability of the regional partnership program; and
WHEREAS, the proposed amendments will ensure that the City of San Bernardino achieves full cost recovery for the regional animal sheltering services provided to partner jurisdictions.
BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1. The City Manager is authorized to execute amendments to the Regional Partnership Agreements for animal sheltering services with the Cities of Colton, Fontana, Grand Terrace, Loma Linda, and Rialto to allow for full cost recovery associated with providing animal sheltering services.
SECTION 2. The City Manager is authorized to revise the cost allocation methodology to include salary and benefit costs associated with all personnel supporting shelter operations, including full-time employees, Seasonal Temporary Assignment Staff (SBTS), and per diem veterinarians, rather than limiting the allocation to only the additional positions originally added to support the partnership.
SECTION 3. The amendments shall authorize the application of a three percent (3%) Consumer Price Index (CPI) adjustment to the annual year-end reconciliation billing to account for inflationary increases in operational costs.
SECTION 4. CEQA. The Mayor and City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines in that it can be seen with certainty that the activity will not have a significant effect on the environment.
SECTION 5. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are declared to be severable.
SECTION 6. The City Clerk shall certify to the adoption of this Resolution and the same shall become effective immediately.
APPROVED and ADOPTED by the City Council and signed by the Mayor and attested by the City Clerk this 18
th day of March 2026.
___________________________
Helen Tran, Mayor
City of San Bernardino
Packet Page. 1089
Resolution No. 2026-030
Resolution No. 2026-030
March 18, 2026
Attest:
__________________________________
Telicia Lopez, CMC, City Clerk
Approved as to form:
__________________________________
Sonia Carvalho, City Attorney
Packet Page. 1090
Resolution No. 2026-030
Resolution No. 2026-030
March 18, 2026
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) ss
CITY OF SAN BERNARDINO )
I, Telicia Lopez, CMC, City Clerk, hereby certify that the attached is a true copy of Resolution No. 2026-030 adopted at a regular meeting held on the 18th day of March 2026 by the following vote:
Council Members: AYES NAYS ABSTAIN ABSENT
SANCHEZ
IBARRA
FIGUEROA
SHORETT
KNAUS
FLORES
ORTIZ
WITNESS my hand and official seal of the City of San Bernardino this day of 2026.
__________________________
Telicia Lopez, CMC, City Clerk
Packet Page. 1091
3 1
5 6
DISCUSSION
City of San Bernardino
Request for Council Action
Date: March 18, 2026
To: Honorable Mayor and City Council Members
From: Tanya Romo, Deputy City Manager
Zuyva Ruiz, Budget Division Manager
Department: Finance & Management Services
Subject: Fiscal Year 2025/26 Mid-Year Financial Update (All Wards) Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Receive and file the Fiscal Year 2025/26 Mid-Year Financial Update; and
2. Adopt Resolution 2026-031 authorizing the Director of Finance and Management Services to amend the FY 2025/26 Operating Budget by $1,085,904 as outlined in the Fiscal Year 2025/26 Mid-Year Financial Update.
City Manager's Comments
The City Manager recommends approval of the Mid-Year Financial Update.
Executive Summary
The Fiscal Year (FY) 2025/26 Mid-Year Financial Update provides the Mayor and City Council with a comprehensive assessment of the City’s financial position at the halfway point of the fiscal year. The report evaluates revenue and expenditure performance, identifies necessary budget adjustments, and highlights the economic conditions shaping the City’s near-term fiscal outlook. The City’s General Fund financial position remains stable. The projected year-end operating deficit is the planned and authorized execution of the budget the City Council adopted in June 2025, which included the deliberate use of fund balance for one-time capital, infrastructure, and public safety investments. The General Fund is projected to end FY 2025/26 with an ending fund balance of approximately $178.5 million, including $138.5 million in spendable reserves, while remaining in full compliance with all adopted reserve policies. General Fund revenues are now projected to total approximately $219.4 million, approximately $8.8 million below the adopted budget. This shortfall is driven primarily by softer performance in economically sensitive revenue sources, particularly Sales & Use Tax,
Packet Page. 1092
3 1
5 6
Measure S, and Utility Users Tax, and reflects broader economic conditions impacting consumer spending, labor markets, and utility consumption across the region. These trends are consistent with conditions observed at the close of FY 2024/25 and are not unique to San Bernardino. General Fund expenditures are projected to finish the year at approximately $247.3 million, approximately $10.2 million below the adopted budget.
Savings are primarily attributable to vacancy management, delayed hiring, and the careful timing of capital and contractual activities. These expenditure controls have helped offset a meaningful portion of the revenue shortfall. As part of the mid-year process, departments submitted budget adjustment requests to address operational needs arising in the second half of the fiscal year. Following City Manager review, a total amendment of $1,085,904 is recommended for City Council approval: $535,904 to the General Fund, $200,000 to the Asset Forfeiture - State Fund, and $350,000 to the Liability Insurance Fund.
Background
On February 4, 2026, the Mayor and City Council received the City’s Annual Comprehensive Financial Report for the Year Ended June 30, 2025. The report confirmed that for FY 2024/25, the City used $22.4 million of fund balance, resulting in a total General Fund balance of $178.5 million. Of that amount, $39.6 million is nonspendable, leaving a net spendable fund balance of $138.9 million.
The mid-year financial update serves as a critical tool for assessing whether revenue and expenditure trends are aligned with adopted assumptions, identifying areas requiring budget adjustment, and informing the City Council of the economic conditions likely to influence fiscal performance through year-end and into FY 2026/27.
Revenue and expenditure performance for both FY 2024/25 year-end and FY 2025/26 mid-year reflect a combination of broader macroeconomic conditions and local operational factors. Finance staff regularly reviews data from Beacon Economics, the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, the California Department of Finance, and the City’s sales tax consultants to ensure that projections remain grounded in current economic realities. The following sections outline the key economic conditions shaping the City’s fiscal environment during this period.
While the broader economy has avoided a recession, growth has slowed and uncertainty has increased. These conditions have directly influenced household behavior, consumer spending, business investment, and development activity, all of which affect the City’s major revenue streams. For a city like San Bernardino, which relies heavily on economically sensitive revenues such as Sales & Use Tax and Measure S, understanding where these pressures originate is essential to interpreting current financial performance accurately.
Consumer Spending & Retail Activity
Consumer spending patterns play a significant role in the City’s largest discretionary revenue sources, including Sales & Use Tax, Measure S, and Franchise Tax. Although overall economic activity continues to expand, recent growth has been uneven, with
Packet Page. 1093
3 1
5 6
more activity concentrated in service-related spending than in purchases of taxable goods. Higher living costs, elevated interest rates, and ongoing economic uncertainty have contributed to slower growth in discretionary retail categories, including general consumer goods, autos and transportation, and business-related purchases, which are more sensitive to consumer confidence and directly affect local sales tax performance.
Continued growth in e-commerce has also changed how taxable sales are allocated.
A greater share of these transactions flows through statewide and countywide pools rather than directly to local jurisdictions, which can limit local revenue growth even when overall taxable activity is present. Looking ahead, consumer spending is expected to remain constrained through the remainder of the fiscal year and into FY 2026/27, reinforcing the importance of conservative revenue forecasting.
Inland Empire Logistics & Warehousing
The Inland Empire’s logistics and warehousing sector is a key economic driver for the region and directly influences the City’s sales tax base. Beacon Economics has noted a hiring slowdown in the warehouse and logistics sector as part of a broader post- pandemic normalization. Shifts in national trade policy, including the potential for expanded tariffs on key trading partners, present additional risk to this sector. A slowdown in goods movement through the region directly reduces taxable commercial activity and compounds the softening already seen in consumer-facing retail categories. These dynamics are reflected in the City’s mid-year revenue projections and identify the local dimension of what may otherwise appear to be abstract national economic trends.
Labor Market & Household Behavior
Labor market conditions shape household purchasing capacity and confidence, which in turn affect consumer behavior and economically sensitive revenues. Through late 2025, national employment conditions remained relatively stable but showed signs of cooling. The U.S. unemployment rate reached 4.6% in November 2025, reflecting a softening labor market. At the state level, California’s unemployment rate was reported at 5.5% in December 2025, consistently higher than the national average. Regionally, the Riverside-San Bernardino-Ontario metropolitan area reported an unemployment rate of 5.4% in December 2025, with notable month-to-month fluctuations during the second half of the year.
Job growth has been uneven across industries, with continued challenges in goods- producing sectors such as construction and manufacturing, while gains have been concentrated in service-providing industries including health care and government.
Additionally, federal workforce reductions implemented during this period have begun to affect government employment nationally and have the potential to reduce household income and local spending activity in communities with a meaningful federal employment presence. In this environment, households tend to prioritize essential purchases and reduce discretionary spending, placing downward pressure on the taxable goods categories that most directly affect local revenues.
Packet Page. 1094
3 1
5 6
Housing, Development, and Construction Activity
Housing and development conditions continue to influence both revenue generation and expenditure patterns. National and statewide indicators show that housing construction activity has slowed over the past year due to higher interest rates, rising construction costs, and ongoing affordability challenges. Statewide and regional data reflect slower growth in building permits and housing starts relative to prior years.
At the local level, these conditions affect the development pipeline and construction activity, which, in turn, influence revenues from Licenses & Permits and construction- related Charges for Services. While development activity continues, the pace and timing of projects have been uneven, contributing to fee-based revenue variability and reinforcing the need for conservative assumptions when forecasting development- driven revenue sources.
Utility Consumption & Energy Use
Utility usage naturally fluctuates throughout the year based on weather, business activity, and consumer behavior. From July through December 2025, utility consumption in San Bernardino County generally followed typical seasonal patterns but was lower than projected. Milder weather during portions of late summer and early fall reduced peak residential electricity demand, and usage declined further as temperatures cooled into the fall and winter months.
During this period, utility rates remained relatively high; however, higher prices did not translate into increased consumption. Many households and businesses adjusted usage to manage costs, while conservation efforts and energy-efficient technologies also contributed to lower overall demand. Because Utility Users Tax revenues are based on consumption rather than rates alone, reduced usage directly contributed to the revenue shortfall in this category. Given the influence of weather, seasonality, and customer behavior on utility consumption, this revenue source is subject to natural variability and is best approached using moderately conservative forecasting assumptions.
Interest Rate Environment & Financial Markets
Interest rates and financial market conditions influence certain City revenues through their effect on cash balances, investment returns, and the use of City-owned assets.
Over the past year, interest rates have remained elevated compared to the historically low levels seen earlier in the decade. This environment has supported higher short- term investment earnings for public agencies, including local governments, as funds earn higher yields in money markets and other permitted investment vehicles.
At the same time, financial markets have remained sensitive to inflation trends, expectations around future monetary policy, and broader economic uncertainty. While inflation has moderated, forecasts from Beacon Economics and other economic analysts indicate that interest rates may remain elevated for some time, with the potential for adjustment as economic conditions evolve. These market conditions affect revenues associated with Investment Income and the Use of Money & Property. While
Packet Page. 1095
3 1
5 6
higher interest rates can temporarily increase investment earnings, these revenues are inherently volatile and can change quickly as interest rates rise or fall. Unlike revenues tied to consumer spending or development activity, investment-related revenues are influenced more by financial market conditions than by local economic activity and should therefore be viewed as cyclical rather than permanent. Finance staff actively monitors Federal Reserve policy decisions, interest rate trends, and upcoming monetary policy leadership transitions, as these factors may influence financial market conditions and investment performance.
State Fiscal Environment
The State of California is also facing ongoing fiscal pressures that may influence the City’s financial outlook in future years. While the Governor’s proposed 2026/27 State Budget is currently projected to be roughly balanced (deficit of $2.9B), the Legislative Analyst’s Office notes that this balance relies on optimistic revenue assumptions tied to recent strength in income tax collections and financial markets. Because California’s tax system depends heavily on capital gains revenue, a potential stock market correction could significantly reduce state revenues.
In addition, both the administration and the Legislative Analyst’s Office project ongoing multiyear structural deficits, with estimated annual budget gaps ranging from approximately $20 billion to $35 billion in the coming years. These conditions may increase the likelihood of future program adjustments, spending reductions, or cost shifts to local governments. As a result, the City should not rely on growth in state pass- through revenues or new state funding sources when planning future budgets. Finance staff will continue to monitor state budget developments, as decisions regarding program funding, revenue allocations, and potential cost shifts could affect the City’s financial position.
Discussion
General Fund Revenue Performance
General Fund revenues for FY 2025/26 are projected to total approximately $219.4 million, which is $8.8 million below the adopted budget. This reflects softer performance in economically sensitive revenues such as Sales Tax and Utility User Tax, partially offset by stronger-than-expected performance in certain service-related and enforcement-driven revenue categories. Overall, revenue trends seen at the end of FY 2024/25 have continued into the current fiscal year, suggesting these results are tied to broader economic conditions rather than short-term fluctuations.
Packet Page. 1096
3 1
5 6
Major Revenue Categories
Sales & Use Tax and Measure S Sales Tax together account for approximately
45.5% of General Fund revenues and are currently tracking below budget projections.
Sales & Use Tax revenues are projected to be approximately $2.8 million (5.4%) below budget, while Measure S revenues are projected to be $1.5 million (2.9%) below budget. These results are consistent with the consumer spending trends and logistics sector slowdown described above, including reduced discretionary retail activity and the continued shift of online sales tax allocations through statewide and countywide pools rather than directly to local jurisdictions.
Utility Users Tax represents approximately 12.6% of General Fund revenues and is projected to finish approximately $4.1 million (13.1%) below budget. This shortfall is driven primarily by lower-than-expected consumption rather than rate changes. Milder weather, conservation behavior, and moderated commercial activity reduced overall usage, and higher rates did not translate into higher revenues as a result.
Property Taxes in lieu of VLF make up 11.5% of General Fund revenues and are projected to remain relatively stable, slightly higher than the prior fiscal year. Growth in assessed valuation continues, but at a slower pace than seen in previous years.
Elevated interest rates and housing affordability challenges appear to be moderating housing activity, limiting stronger growth.
Licenses & Permits account for 6.5% of General Fund revenues and are projected to finish close to adopted assumptions. This reflects slower development activity both locally and statewide. Higher financing costs and affordability challenges in construction have led to fewer housing starts and permits overall. Locally, development continues, but project timing has been uneven, with some projects delayed, scaled back, or phased over longer periods, contributing to permit activity variability.
Charges for Services represent approximately 3.1% of General Fund revenues and are projected to finish approximately $906,000 (15.6%) above the adopted budget.
R evenue Category FY 2023/24
Actuals
FY 2024/25
Actuals
FY 2025/26
Adopted
FY 2025/26
Amended
FY 2025/26
Y T D Actuals as
of 12/31/25
FY 2025/26
Projected
Y ear-E nd T otal
% Change
from Adopted
Charges for services 6,829,807$ 6,184,405$ 5,822,130$ 5,822,130$ 2,848,751$ 6,728,670$ 15.6% Fines and forfeitures 766,079$ 1,211,377$ 891,000$ 891,000$ 609,477$ 2,145,409$ 140.8% Franchise T ax 14,328,378$ 13,908,285$ 14,560,000$ 14,560,000$ 3,549,822$ 14,546,664$ -0.1% Intergovernmental 6,753,174$ 5,602,977$ 5,018,400$ 5,580,900$ 2,648,013$ 6,056,240$ 20.7% Investment income 3,373,049$ 3,166,512$ 1,050,000$ 1,050,000$ 1,157,707$ 3,716,834$ 254.0% Licenses & permits 16,059,891$ 14,575,494$ 14,287,000$ 14,287,000$ 6,272,790$ 14,171,910$ -0.8% Miscellaneous 7,737,893$ 4,980,145$ 7,411,797$ 7,436,797$ 244,517$ 3,983,285$ -46.3% Other T axes 12,409,515$ 11,601,877$ 11,780,000$ 11,780,000$ 4,053,038$ 11,222,569$ -4.7% Property T axes 23,604,046$ 25,443,736$ 25,149,250$ 25,149,250$ 26,666$ 25,198,138$ 0.2% S ales and Use T ax 55,612,168$ 52,367,619$ 52,058,494$ 52,058,494$ 12,526,142$ 49,235,897$ -5.4% T axes 5,439$ -$ -$ -$ 6,814$ -$ 0.0% Use of Money and Property 5,273,844$ 6,184,183$ 6,383,760$ 6,383,760$ 1,130,247$ 4,282,347$ -32.9% Utility Users T ax 28,671,310$ 29,146,952$ 31,740,980$ 31,740,980$ 13,340,980$ 27,597,814$ -13.1% Measure S S ales T ax 51,214,630$ 51,617,498$ 52,040,000$ 52,040,000$ 12,454,601$ 50,521,000$ -2.9% General Fund R evenue T otal 232,639,223$ 225,991,060$ 228,192,811$ 228,780,311$ 60,869,564$ 219,406,777$ -3.9%
Packet Page. 1097
3 1
5 6
Strong performance in storm drain utility fees, board-up and demolition services, and other service-based categories reflects increased operational activity and improved staffing levels in code enforcement, rather than broader economic growth.
Fines & Forfeitures represent approximately 1% of General Fund revenues and are projected to finish at approximately $1.2 million above budget, or 140% above adopted assumptions. This increase reflects enhanced enforcement efforts in code administration and parking, driven by improved staffing capacity and departmental focus rather than changes in underlying community conditions.
Investment Income & Use of Money & Property are projected to exceed the adopted budget by approximately $565,000, reflecting elevated interest rates and favorable short-term investment yields. While this represents a meaningful offset to underperforming revenue categories, these earnings are inherently cyclical and should not be assumed as a permanent revenue source in future budget planning.
General Fund Expenditure Performance
The General Fund is projected to end FY 2025/26 with a planned operating deficit, reflecting the Council-approved use of fund balance adopted as part of the FY 2025/26 budget. At budget adoption, the City Council authorized the use of fund balance for specific one-time purposes, including capital improvements, fleet replacement, public safety vehicles, sidewalk repairs, tree trimming, and other identified needs. These uses were incorporated into the adopted budget and were not intended to support ongoing operating costs. The projected year-end deficit reflects the intentional execution of the adopted financial plan.
In addition to the approved use of fund balance, the FY 2025/26 adopted budget incorporated an $8 million expenditure credit associated with anticipated salary savings from a six-month hiring deferral. Following the completion of labor negotiations, City Council approved an extension of the deferral for an additional six months, with the intent of realizing up to $14 million in total salary savings to help absorb negotiated cost increases. As the fiscal year has progressed, salary savings have been realized through vacancy management and delayed hiring; however, the full $14 million is not expected to be achieved. To maintain service levels, departments have relied on part- time staffing and overtime, which has offset a portion of the vacancy-related savings.
Even with these offsets, vacancy management has helped moderate personnel costs, and the General Fund remains on track to end the year consistent with the adopted budget framework.
Packet Page. 1098
3 1
5 6
Major Expenditures Categories
Public Safety remains the largest area of General Fund spending, representing 48.7% of the total amended General Fund budget. Police expenditures are projected to end the fiscal year near the amended budget at approximately $139.1 million. While staffing vacancies have produced some salary savings, minimum staffing requirements have necessitated the use of overtime and part-time staffing to ensure continuity of operations. The department continues to manage spending carefully while maintaining necessary investments in fleet, equipment, and infrastructure.
Community Development & Housing accounts for 5.6% of the General Fund budget and is projected to end the year $3.6 million (22.7%) below the FY 2025/26 amended budget. The variance is largely the result of staffing vacancies, delayed hiring, and slower-than-anticipated development activity, rather than reductions in services.
Because personnel costs make up a significant portion of the department’s budget, vacancy management and recruitment timing have helped keep overall personnel spending below initial assumptions, even as some overtime and part-time staffing has been used to maintain service levels. Spending on professional and contractual services, such as planning, housing, and compliance-related work, has also come in lower than expected as development projects and related activities have moved forward more gradually than anticipated. These differences are primarily timing-related and reflect broader regional trends in development and construction activity, not reductions in programs or service capacity.
Department F Y 2023/24
A ctuals
F Y 2024/25
A ctuals
F Y 2025/26
A dopted
F Y 2025/26
A mended
F Y 2025/26
Y T D A ctuals as
of 12/31/25
F Y 2025/26
P rojected
Y ear-E nd T otal
% Change
from
A mended
Mayor 279,481 $ 312,597 $ 328,273 $ 328,273 $ 169,895 $ 319,314 $ -2.7% C ity C ouncil 1,061,509 $ 1,144,563 $ 1,191,224 $ 1,191,224 $ 628,719 $ 1,140,481 $ -4.3% C ity C lerk 1,391,383 $ 1,610,719 $ 1,928,538 $ 1,928,538 $ 829,594 $ 1,609,220 $ -16.6% L egal S ervices 4,795,033 $ 5,821,618 $ 5,197,318 $ 5,197,318 $ 1,753,831 $ 4,477,142 $ -13.9% G eneral G overnment 19,370,893 $ 33,959,304 $ 19,099,803 $ 20,519,803 $ 12,155,586 $ 20,519,803 $ 0.0% Non Departmental - $ - $ (8,107,624) $ (8,107,624) $ - $ - $ -100.0% C ity Manager 3,424,979 $ 3,065,051 $ 3,589,935 $ 3,589,935 $ 1,510,170 $ 2,909,244 $ -19.0% Human R esource & R isk Management 2,390,082 $ 2,579,595 $ 2,881,727 $ 3,095,970 $ 1,520,447 $ 2,996,576 $ -3.2% F inance & Management S ervices 5,044,637 $ 6,119,022 $ 7,187,643 $ 7,187,643 $ 3,438,776 $ 6,692,211 $ -6.9% E conomic Development 237,278 $ 1,991,184 $ 2,900,814 $ 2,900,814 $ 957,445 $ 1,882,759 $ -35.1% S pecial A ssessment District 114,321 $ 145,653 $ 175,000 $ 175,000 $ 146,120 $ 175,000 $ 0.0% C apital Improvement P rojects 320,505 $ 1,652,555 $ - $ 2,907,924 $ 1,141,045 $ 2,730,402 $ -6.1% C ommunity Development & Housing 9,341,981 $ 10,874,847 $ 14,866,073 $ 15,984,758 $ 5,751,902 $ 12,350,385 $ -22.7% P olice 114,096,196 $ 128,564,838 $ 136,646,578 $ 139,127,468 $ 82,921,948 $ 139,069,203 $ 0.0% P arks, R ecreation & C ommunity 5,109,685 $ 5,284,718 $ 6,091,320 $ 6,489,999 $ 2,856,776 $ 5,954,159 $ -8.3% P ublic W orks 26,606,218 $ 30,531,908 $ 16,859,309 $ 17,103,914 $ 7,587,991 $ 14,884,793 $ -13.0% Operations and Maintenance (O&M) - $ - $ 17,821,891 $ 17,695,640 $ 7,279,645 $ 14,499,309 $ -18.1% L ibrary 2,601,058 $ 4,714,510 $ 5,088,922 $ 5,113,922 $ 2,448,519 $ 4,750,324 $ -7.1% General Operating E xpenditures 196,185,240 $ 238,372,682 $ 233,746,745 $ 242,430,518 $ 133,098,411 $ 236,960,326 $ 1.4% C apital Improvement P rojects 7,314,997 $ 9,412,429 $ 23,775,000 $ 42,963,925 $ 2,538,489 $ 10,353,672 $ -75.9% P arks, R ecreation & C ommunity - $ - $ - $ 8,500 $ - $ - $ P ublic W orks - $ 2,520,051 $ - $ 129,949 $ - $ - $ Operations and Maintenance (O&M) - $ - $ - $ 189,750 $ - $ - $ Measure S E xpenditures 7,314,997 $ 11,932,480 $ 23,775,000 $ 43,292,125 $ 2,538,489 $ 10,353,672 $ GE NE RA L F UND T OT A L E X P E NDIT URE S203,500,237 $ 250,305,162 $ 257,521,745 $ 285,722,643 $ 135,636,900 $ 247,313,998 $ -4.0%
Packet Page. 1099
3 1
5 6
Public Works accounts for 6.0% of the General Fund budget and is projected to end the year $2.2 million (13.0%) below the FY 2025/26 amended budget. The difference is largely driven by staffing vacancies, the timing of projects, and the phased nature of contractual and maintenance work, rather than any reduction in services. Because some positions have remained vacant during the year, personnel costs have come in lower than expected, though the department has used targeted overtime and temporary staffing when needed to maintain day-to-day operations and address seasonal workloads. In addition, several Public Works staff positions that are budgeted in the General Fund spend part of their time supporting capital improvement projects.
As those projects move forward, the department has been careful to charge the time of project managers and staff working on them to the appropriate Capital Improvement Program (CIP) funding sources, consistent with project accounting and grant requirements. This helps ensure staffing costs are aligned with the work being performed and reduces pressure on the General Fund while maintaining transparency across funding sources.
Operations & Maintenance makes up 6.2% of the General Fund budget and is expected to end the year about $3.2 million (18.1%) under budget. This is largely due to vacancies in several higher-level positions and lower-than-expected spending on materials, supplies, and contractual services. Despite these gaps, the department has maintained core services, focusing on critical maintenance, health and safety work, and high-visibility service requests to ensure community needs continue to be met.
Capital Improvement Projects account for 16.1% of the General Fund budget and are projected to finish the year 71.5% below the FY 2025/26 amended budget, the largest variance across all budget areas. This reflects the multi-year nature of many CIP projects and the timing of procurement, design, and construction activities. Year- end underspending is expected, and any unspent appropriations will carry forward to future fiscal years as projects continue to progress.
Mid-Year Additional Budget Requests
As part of the FY 2025/26 mid-year process, departments submitted additional budget requests to address operational needs arising in the second half of the fiscal year.
Each request was reviewed and evaluated by the City Manager prior to being presented to the Mayor and City Council for consideration. The following summarizes the adjustments recommended for approval, totaling $1,085,904 across three funds.
Legal Services submitted requests totaling $565,588 to address increased contractual obligations and outside legal service costs. Following City Manager review, a total adjustment of $315,588 is recommended. This includes approximately $63,424 to reflect a contractually required CPI adjustment to the City’s retainer agreement with BB&K, effective July 2025, and approximately $252,164 for contractual services encompassing outside attorney expenses and document management costs associated with professional service agreements approved by the Mayor, City Council,
Packet Page. 1100
3 1
5 6
and City Manager for outside legal representation through June 30, 2026.
Human Resources submitted requests totaling $516,923 to support employee benefits, contractual services, and active legal matters. Following City Manager review, a General Fund adjustment of $35,491 is recommended, including $7,807 to cover pending tuition reimbursement requests carried over from the prior year and $27,684 to fund professional and contractual services needed to support department operations through June 30, 2026. In addition, $350,000 is recommended for legal services related to active litigations and investigations, with these costs appropriated from the Liability Insurance Fund rather than the General Fund. This approach aligns with the purpose of the Liability Insurance Fund and avoids unnecessary impact on the General Fund.
Police Department requested $200,000 in operating adjustments and proposed a personnel restructuring within its Finance Unit. The $200,000 is recommended for the acquisition of specialized equipment for the Special Enforcement Unit to support high- risk operational response capabilities. This funding comes entirely from the State Asset Forfeiture Fund and carries no General Fund impact, consistent with permissible uses of those resources. In addition, the department is proposing a cost-neutral restructuring within its Finance Unit. Two authorized, but vacant, Accounting Technician I positions would be eliminated, and the savings would fund the addition of one (1) full-time Management Analyst II and one (1) part-time Senior Office Assistant. This realignment better reflects the unit’s current focus on higher-level analytical, procurement, and contract support functions, with no net impact on the General Fund.
Parks, Recreation, and Community Services submitted requests totaling $319,650 to support personnel, facility safety, and critical equipment needs. Following City Manager review, a total adjustment of $184,825 is recommended. The largest portion, $134,825, addresses a mid-year shortfall in part-time personnel costs, driven by the expansion of year-round aquatics programming, the expiration of Workforce Development Grant funding that previously supported part-time staff, and step increases across filled vacancies. An additional $35,000 is recommended for the replacement of the pool pump at the Jerry Lewis Swim Center, ensuring the City’s primary aquatic facility remains operational ahead of the summer season. Finally, $15,000 is recommended to repair and install outdoor lighting at Community Center facilities, improving safety for staff and the public accessing park sites during evening hours.
Fund Balance & Reserves
The City’s General Fund financial position remains stable and supported by reserves accumulated in prior fiscal years. The FY 2025/26 adopted budget included a planned and Council-approved use of fund balance to support ongoing operations and capital investments during a period of moderating revenues and continued service demands.
Based on current projections, the General Fund will end FY 2025/26 with a net operating deficit consistent with the Council-approved budget. The General Fund is projected to maintain an ending fund balance of approximately $178.5 million, of which
Packet Page. 1101
3 1
5 6
$40.0 million is nonspendable, leaving a net spendable fund balance of $138.5 million.
This reflects the planned drawdown associated with the approved use of fund balance while preserving the City’s overall financial capacity.
Most importantly, the City remains in full compliance with its adopted reserve policies.
Both the 15% Emergency Reserve and the 10% Economic Contingency Reserve are fully maintained at year-end, despite the planned use of fund balance. This reflects the strength of the reserves built in prior years and the discipline applied in managing expenditures throughout the current fiscal year.
Looking Ahead: FY 2026/27 Considerations
As the City enters FY 2026/27, it faces a mix of local, state, and national fiscal pressures. Locally, moderating revenue growth, higher personnel costs from recent labor agreements, ongoing service demands, and the one-time fund balance drawdown in FY 2025/26 shape the budget outlook. At the state level, California’s balanced 2026/27 budget relies on optimistic revenue assumptions, particularly capital gains, while structural deficits of $18–35 billion in coming years increase the risk of spending reductions or cost shifts to local governments. Nationally, potential tariff escalation and federal spending or workforce changes could affect household income, consumer activity, and sales tax revenue. Together, these conditions support a conservative approach to revenue forecasting and continued expenditure discipline.
Category
F Y 2021/22
A ctuals
(audited)
F Y 2022/23
A ctuals
(audited)
F Y 2023/24
A ctuals
(audited)
F Y 2024/25
A ctuals
(audited)
F Y 2025/26
A dopted
F Y 2025/26
Y ear-E nd E stimated
Beginning Fund Balance, as of J une 30th 110,742,632 $ 156,449,095 $ 173,462,555 $ 202,925,562 $ 178,515,774 $ 178,515,774 $ R evenues 208,775,374 $ 221,320,505 $ 233,643,492 $ 228,011,214 $ 228,192,811 $ 219,406,777 $ E xpenditures (includes CIP E xpenditures) (163,068,911) $ (204,307,045) $ (204,180,485) $ (252,421,002) $ (257,521,740) $ (247,313,998) $ Net Surplus/Deficit - (Use of Fund Balance) 45,706,463 $ 17,013,460 $ 29,463,007 $ (24,409,788) $ (29,328,929) $ (27,907,221) $ Council Approved Use of Fund Balance 29,328,929 $ 27,907,221 $ E nding Fund Balance 156,449,095 $ 173,462,555 $ 202,925,562 $ 178,515,774 $ 178,515,774 $ 178,515,774 $ ACFR 2021-22 ACFR 2022-23 ACFR 2023-24 ACFR 2024-25 Category
FUND BALANCE
06-30-2022
FUND BALANCE
06-30-2023
FUND BALANCE
06-30-2024
FUND BALANCE
06-30-2025
FUND BALANCE
06-30-2026
(estimated)
FUND BALANCE
06-30-2026
(estimated)
Nonspendable 40,204,687 41,421,536 40,806,497 39,593,408 41,000,000 40,000,000 R estricted 2,107,208 2,086,366 2,099,574 2,164,740 2,100,000 1,800,000 Committed
Animal S ervices 68,387 68,387 - - - -
G eneral Plan Update 55,048 142,877 551,312 471,515 600,000 600,000 Measure S - Capital Projects 57,201,940 81,762,949 86,734,706 68,201,640 70,435,339 74,287,274 15% E mergency R eserve 28,130,824 28,788,264 35,618,054 38,628,262 38,628,261 37,097,100 10% E conomic Contingency R eserve 18,753,883 19,192,176 23,745,369 25,752,175 25,752,174 24,731,400 Assigned 6,669,342 - 13,370,050 3,704,034 - -
Unassigned 3,257,776 - - - - -
T OT AL FUND BALANCE 156,449,095 173,462,555 202,925,562 178,515,774 178,515,774 178,515,774 Less: Nonspendable 40,204,687 41,421,536 40,806,497 39,593,408 41,000,000 40,000,000 NE T FUND BALANCE 116,244,408 132,041,019 162,119,065 138,922,366 137,515,774 138,515,774
CALCULAT ION OF FUND BALANCE
F UND BALANCE DE SIG NAT ION
Packet Page. 1102
3 1
5 6
Finance staff will monitor developments and present the FY 2026/27 Proposed Budget with updated projections, personnel cost adjustments, and a full assessment of the City’s structural fiscal position.
2021-2025 Strategic Targets and Goals
Receiving and Filing the FY 2025/26 Mid-Year Financial Update Report aligns with Key Target No. 1: Improved Operational & Financial Capacity. Updated revenue and expenditure projections provide the Mayor and City Council with the information and analysis needed to make financial decisions that impact the City.
Fiscal Impact
The total FY 2025/26 budget amendment to the operating budget is $1,085,904. $535,904 will be amended in General Fund, $200,000 will be amended into the Asset Forfeiture State Fund, and $350,000 into the Liability Insurance Fund.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Receive and file the Fiscal Year 2025/26 Mid-Year Financial Update; and
2. Adopt Resolution 2026-031 authorizing the Director of Finance and Management Services to amend the FY 2025/26 Operating Budget by $1,085,904 as outlined in the Fiscal Year 2025/26 Mid-Year Financial Update.
Attachments
Attachment 1 Resolution No. 2026-031; Fiscal Year 2025-26 Budget Amendments
Ward:
All Wards
Synopsis of Previous Council Actions:
June 4, 2025 The Mayor and City Council adopted Resolution No. 2025-298 approving the City of San Bernardino’s Operating Budget and Capital Improvement Program (CIP) for Fiscal Year 2025/26.
CC: Eric Levitt, City Manager
Packet Page. 1103
Resolution No. 2026-031
Resolution No. 2026-031
March 18, 2026
RESOLUTION NO. 2026-031
RESOLUTION OF THE MAYOR AND CITY COUNCIL OF
THE CITY OF SAN BERNARDINO, CALIFORNIA,
AUTHORIZING THE DIRECTOR OF FINANCE AND
MANAGEMENT SERVICES TO AMEND THE FY 2025/26
OPERATING BUDGET IN THE AMOUNT OF $ 1,085,904
FOR THE AMOUNTS DETAILED IN THE MID -YEAR
FISCAL YEAR 2025/26 REPORT
WHEREAS, the City of San Bernardino remains committed to responsible fiscal stewardship and long-term financial sustainability while continuing to deliver essential services to its residents; and
WHEREAS, as part of the FY 2025/26 mid-year financial review, the City assess revenue and expenditure performance and identified budget adjustments necessary to address departmental operational needs through the close of the fiscal year; and WHEREAS, following City Manager review, budget amendments totaling $1,085,904 across the General Fund, Asset Forfeiture – State Fund, and Liability Insurance Fund are recommended to ensure the City meets its contractual, operational, and public safe ty obligations through June 30, 2026.
BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1. The above recitals are true and correct and are incorporated herein by this reference.
SECTION 2. That the Mayor and City Council hereby authorize the Director of Finance and Management Services to amend the FY 2025/26 Operating Budget in the amount of $1,085,904 as detailed in the Mid-Year Fiscal Year 2025/26 Report, allocated as follows: General Fund: $535,904; Asset Forfeiture – State Fund: $200,000; and Liability Insurance Fund: $350,000.
SECTION 3. CEQA. The Mayor and City Council finds this Resolution is not subject to the California Environmental Quality Act (CEQA) in that the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty, as in this case, that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.
SECTION 4. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end the provisions of this Resolution are declared to be severable.
SECTION 5. Effective Date. This Resolution shall become effective immediately.
Packet Page. 1104
Resolution No. 2026-031
Resolution No. 2026-031
March 18, 2026
APPROVED and ADOPTED by the City Council and signed by the Mayor and attested by the City Clerk this 18th day of March 2026.
Helen Tran, Mayor
City of San Bernardino
Attest:
Telicia Lopez, CMC, City Clerk
Approved as to form:
Sonia Carvalho, City Attorney
Packet Page. 1105
Resolution No. 2026-031
Resolution No. 2026-031
March 18, 2026
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) ss
CITY OF SAN BERNARDINO )
I, Telicia Lopez , CMC, City Clerk, hereby certify that the attached is a true copy of Resolution No. 2026-031, adopted at a regular meeting held on the 18th day of March 2026 by the following vote:
Council Members: AYES NAYS ABSTAIN ABSENT
SANCHEZ _____ _____ _______ _______
IBARRA _____ _____ _______ _______
FIGUEROA _____ _____ _______ _______
SHORETT _____ _____ _______ _______
KNAUS _____ _____ _______ _______
FLORES _____ _____ _______ _______
ORTIZ _____ _____ _______ _______
WITNESS my hand and official seal of the City of San Bernardino this ___ day of ____________ 2026.
Telicia Lopez, CMC, City Clerk
Packet Page. 1106
3 2
4 5
ITEMS TO BE CONSIDERED FOR FUTURE MEETINGS
City of San Bernardino
Request for Council Action
Date: March 18, 2026
To: Honorable Mayor and City Council Members
From: City Council
Department: Council Office
Subject: Authorize and Direct Outside Legal Counsel Larson LLP to Draft a Resolution of Censure Relative to Councilmember Dr. Treasure Ortiz for Illegal and Unethical Conduct, and to Authorize and Direct Staff to Schedule a Censure Public Hearing for the April 1, 2026, Regular Meeting of the Mayor and City Council (All Wards) - (City Council)
Packet Page. 1107