Attachment 1Attachment 1Financial ReportSecond Quarter of FY 2025-26Financial ReportSecond Quarter of FY 2025-26 Attachment 1
Attachment 1
Financial Report
Second Quarter of FY 2025-26
Financial Report
Second Quarter of FY 2025-26
October-December 2025
Current Financial Condition
At the end of the second quarter, expenditures exceed revenues due to the timing of property tax receipts. High receipt months for Property taxes are December, January, April and May. Overall, revenues and expenditures are within budgetary expectations for this time of the year.
General Fund
General Fund revenues through the second quarter total $37.0 million, or 41% of the $89.8 million annual budget. General Fund revenue is $4.1 million higher than the second quarter of the prior year. Increases were seen in property taxes, sales tax, other taxes, intergovernmental, fines, and interest and rents; whereas decreases were seen in TOT taxes, permits and fees, service charges and interfund transfers.
General Fund expenditures total $44.5 million for the second quarter, or 45% of the $98.6 million annual budget, as compared to $47.6 million at this time last year. In total, expenditures ended the quarter $3.1 million less than the prior year due to decreases in personnel benefit costs, supplies, and capital outlay.
At the end of the second quarter, the budget for General Fund expenditures is $98.6 million, which reflects an increase from the adopted budget of $87.4 million. The increase is due to the carryovers from Fiscal Year 2024-25 and budget adjustments that were council approved within the prior fiscal year. It is important to keep in mind that Carryover amounts from the prior fiscal year have already been set aside within the fund balance. When those projects or purchases move forward into the current fiscal year, the spending will appear higher than the current year’s revenues. However, this does not mean that the City is overspending. The expenditures are funded by money that was previously reserved (in the prior fiscal year) and is already sitting the fund balance specifically for that purpose. A portion of the FY2024-25 carryovers are comprised of General Fund expenditures for maintenance, contractual services, and the initial funding of the Section 115 Trust Fund. The remaining amount was related to CIP projects including the ongoing Casa Romantica Stabilization, and various facility maintenance and improvement projects.
Additional information on General Fund revenues and expenditures are discussed further in this report.
General Fund Revenues
Revenues by Category
Budget
YTD Actual
%
Property Taxes
48,185,950
20,012,682
42%
Sales Tax
13,209,500
4,469,997
34%
Transient Occ. Tax
3,550,000
1,180,209
33%
Other Taxes
3,615,000
730,891
20%
Permits & Fees
1,466,870
781,472
53%
Intergovernmental
2,796,345
1,218,339
44%
Service Charges
7,573,880
4,458,194
59%
Fines
624,600
303,426
49%
Interest, Rents, Other
3,985,900
2,145,439
54%
Interfund Transfers
4,802,511
1,730,392
36%
89,810,556
37,031,041
41%
Property Taxes: Property tax revenue is distributed unevenly throughout the year, with 50% in Q2, 40% in Q4, and the remainder is spread across Q1 and Q3. Property taxes total $20.0 million, primarily from secured taxes. The amount is $3.1 million higher than in the prior year due to higher secured, supplemental, and prior year tax receipts in this fiscal year. This increase is not reflective of an overall increase in Property Tax, it is due to an anomaly that occurred with the timing of receiving property taxes within the 1st and 2nd quarter of the fiscal year.
Sales Tax: Sales tax receipts amount to $4.5 million, which is $210,630 higher than the second quarter of last fiscal year.
Transient Occupancy Taxes (TOT): Transient occupancy taxes total $1.2 million, which is $163,040 less than FY 2025 at this time. The City is diligently working on getting all hotels and STLUs into compliance and current with remitting all TOT due to the City.
Other Taxes: Other taxes, consisting mostly of franchise fees and business licenses, total $730,891, which is similar to last year.
Permits & Fees: Permits and fees are at $781,472. This is $108,411 less than the prior year. The overall issuance of construction permits is lower this fiscal year mostly due to fewer building, mechanical, and plumbing permits.
Intergovernmental: Intergovernmental revenue is derived mainly from grant revenues totaling $1.2 million, which is $897,810 higher due the timing of a state coastal grant and motor vehicle tax revenue.
Service Charges: Service charges, from general government, public safety, parking meter and recreation, amount to $4.5 million, which is $84,300 lower than the same time last year. The increase in service charges primarily made up of GEMT program funding which varies from year to year.
Fines: Revenues from fines total $303,426, which is $21,121 higher than the prior year due to a higher number of parking and administrative citations.
Interest, Rents & Other: Interest, rents and other reimbursements total $2.1 million, which is an increase of $293,551 from the prior year due to an increase in rents and interest earnings.
Interfund transfers: Interfund transfers-in to the General fund, which includes Overhead Charges, remained relatively flat from last year at this time.
General Fund Expenditures
Expenditure by Type
Budget
YTD Actual
%
Salaries
16,658,710
7,532,069
45%
Benefits
7,505,310
3,354,662
45%
Supplies
1,632,832
579,794
36%
Contractual Services
53,826,276
25,487,563
47%
Other Charges
1,568,640
828,512
53%
Capital Outlay
7,106,850
389,286
5%
Interdepartmental
5,937,560
2,979,280
50%
Transfers & Debt
4,327,170
3,366,904
78%
Total
98,563,348
44,518,070
45%
Expenditure by Dept
Budget
YTD Actual
%
General Government
6,594,930
2,906,868
44%
City General
7,094,020
4,145,555
58%
Police
23,857,478
12,479,734
52%
Fire
15,330,720
7,722,086
50%
Marine Safety
2,344,190
1,176,775
50%
Comm. Development
9,619,020
3,880,841
40%
Public Works
26,948,330
8,992,717
33%
Beaches, Parks & Rec
6,774,660
3,213,494
47%
Total
98,563,348
44,518,070
45%
Expenditures for the second quarter of FY 2025-26 are $44.5 million compared to prior year’s $47.6 million. This is a decrease of 3.1 million from the prior year. Salaries increase by $334,089 due lower staff vacancies and COLA increases. Benefits decrease by $1.0 million due to the timing of CSCERP UAL payment allocation. Contractual services increase $1.4 million due to increases in public safety contracts ($0.8 million), maintenance of trees ($218,210), and other contractual services ($112,088). Other charges increased by $129,962 from the prior year. Capital Outlay decreased by $5.0 million, which is due to the timing of project costs such as the sand replenishment project. Transfers and Debt increase from the prior year by $938,753, primarily due to funding of the Section 115 Trust.
By Department, police and fire increase a total of $500,363. Other department changes are as follows: 1) Public works costs decreased by $4.9 million due to the completion of the first phase of sand replenishment in the prior year. 2) Community Development increased by $440,316 from the prior year. 3) City General increased by $959,802 primarily due to funding of the Section 115 Trust. 4) General Government decreased by $246,622. 5) Beaches, Parks and Recreation and Marine Safety are slightly higher compared to prior year due to activity levels.
In total, costs are currently within anticipated results at this time of the year based on the budget.
Enterprise Funds
The following tables summarize the operating revenues, operating expenses, and changes in operating fund working capital for enterprise funds including Water, Sewer, Golf, and Storm Drain funds.
Revenues
Revenue
Budget
YTD Actual
%
Water Fund
31,604,600
11,433,266
36%
Sewer Fund
13,264,161
5,166,831
39%
Golf Fund
3,637,370
2,144,590
59%
Storm Drain Fund
1,633,347
624,280
38%
Water commodity revenues are higher than last year by $314,355 due to other agency reimbursements. Sewer revenues are higher by $296,239 due to increases in service charges.
Golf Course is higher by $65,847 compared to the prior year due to increases to green fee revenues. Storm drain revenues are lower by $33,465 due to decreases in interfund transfers.
Expenses
Expenses
Budget
YTD Actual
%
Water Fund
30,391,420
13,218,725
43%
Sewer Fund
13,338,440
6,119,991
46%
Golf Fund
3,499,695
1,566,453
45%
Storm Drain Fund
1,753,160
713,916
41%
Water expenses decrease by $637,446 when compared to the prior year mainly due to lower purchased water costs. Sewer expenses increased by $401,076 due to increases in interdepartmental charges and contractual services. Golf Course operations were $101,704 less than the same period last year due to lower personnel and supply costs. Storm drain operating expenses were similar to the prior year.
Working Capital
Working Capital
Budget
YTD Actual
Water Fund
3,956,293
957,654
Sewer Fund
(842,125)
(1,721,006)
Golf Fund
2,489,830
2,930,292
Storm Drain Fund
554,473
584,650
Financial Report Second Quarter of FY 2025-26