Finance and Management Services
www.santa-ana.org/finance
Item # 7
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 2, 2026
TOPIC: FY2025-26 Third Quarter Budget Report and Proposed Appropriation Adjustments
AGENDA TITLE
Fiscal Year 2025-26 Third Quarter Budget Report and Proposed Appropriation Adjustments
RECOMMENDED ACTION
1. Receive and file the Fiscal Year 2025-26 Third Quarter Budget Update.
2. Approve the recommended appropriation adjustments. (Requires five affirmative votes)
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
The Third Quarter Budget Update offers a summary of the City’s financial status up to March 31, 2026, which is the 75% point of Fiscal Year 2025–26 (FY25-26). It includes recommendations for adjusting appropriations based on recent revenue trends, spending, and operational needs. This report highlights the City’s commitment to maintaining a balanced budget while adapting to changing economic conditions that influence revenue estimates. It also addresses the continued community demand for the Ayuda Sin Fronteras program. Although the main focus of the recommended changes is on the General Fund, adjustments to various restricted funds are also included to ensure those budgets align with current and expected financial activity.
This report also includes updated revenue estimates, recommended appropriation adjustments, a General Fund summary of revenues and expenditures, and a full-time vacancy report as of March 31, 2026.
The proposed General Fund adjustments result in a net increase of $1,566, bringing the estimated Spendable Fund Balance to $11,628,642. This minor increase is due to adjustments caused by higher-than-anticipated Paramedic Service Charges and Business License Tax revenue. These increases were almost entirely offset by decreases in sales tax estimates for both Bradley Burns and Measure X, discussed in greater detail
FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments June 2, 2026
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in the General Fund Revenue section of this report. The City’s General Fund Reserve Policy requires a reserve equal to 18% of recurring revenue, and the revenue increase of $1,910 raises the reserve requirement by $344.
A General Fund summary as of March 31, 2026, follows.
General Fund Revenue
A summary of General Fund revenue follows.
The City has received approximately $261.4 million in General Fund revenues through March 31, 2026, representing 63.1% of the annual revenue estimate. Because the City continues to accrue revenues through the end of August, current collections indicate that overall FY25–26 revenue targets remain on track.
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Sales Tax (Bradley Burns)
Based on the latest update from the City’s sales tax consultant, staff is adjusting the Bradley-Burns sales tax estimate downward by $669,220, resulting in a revised budget total of $58,242,170. Ongoing political and economic volatility, compounded by persistent inflation, continues to constrain consumer spending. In Santa Ana, these conditions have reduced demand in the auto and transportation sectors, as well as in the building and construction trades. Although housing demand remains relatively strong, the building and construction sectors continue to face significant challenges related to elevated labor, material, and financing costs, which are placing downward pressure on sales tax growth.
Sales Tax (Measure X)
Consistent with the Bradley-Burns adjustment, staff is also reducing the Measure X sales tax estimate by $328,870, bringing the revised budget total to $82,813,710. Measure X revenues continue to face similar economic pressures from inflation and softer consumer spending. However, the reduction is less significant than the Bradley-Burns sales tax adjustment, due in part to continued strength in online sales activity.
Paramedic Services Charge
Revenue from the Paramedic Services Charge continues to perform above budget estimates, partially offsetting current reductions in sales tax revenues. The Public Provider Ground Emergency Medical Transportation (PP-GEMT) program provides supplemental federal reimbursement to eligible public agencies for qualifying emergency medical transportation services provided to Medi-Cal patients. Based on current year-to- date collections, staff is increasing Paramedic Services Charge revenue estimates by $600,000, resulting in a revised budget of $15,800,000.
Business License Tax
Santa Ana’s Business License Tax revenue continues to perform well, supported in part by participation in the California Franchise Tax Board (FTB) City/County Business Tax Program. These efforts have improved the City’s ability to identify unregistered businesses, enhance compliance, and strengthen revenue collection. During FY 2025- 26, the City onboarded approximately 1,000 new business licenses through expanded compliance efforts. As a result, staff is increasing Business License Tax revenue estimates by $400,000, bringing the revised budget total to $17,900,000.
General Fund Expenditures
A summary of General Fund expenditures follows.
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As of March 31, 2026, the City has spent approximately $318.6 million from the General Fund, representing 64.9% of the adjusted budget. Overall year-to-date expenditures remain within an appropriate range for this point in the fiscal year and are generally aligned with budget expectations. Fire & Emergency Medical Services is tracking slightly higher due to the one-month advance, while Museum Funding is nearly on target, reflecting regular recurring payments. Overall, expenditure trends indicate that departments are generally operating within their planned budgets.
Ayuda Sin Fronteras
On March 3, 2026, as part of the Mid-Year Budget Update for the Program, the City Council approved an additional $150,000 in funding for the Ayuda Sin Fronteras program.
The program provides short-term emergency rental and utility assistance to households affected by Immigration and Customs Enforcement (ICE) activity. With this action, the City Council has now approved a total of $400,000 in FY25–26. Based on current program demand, staff is requesting an additional $150,000 allocation, which would increase total program funding to $550,000 for the fiscal year. The additional funding is supported through vacancy savings identified through March 31, 2026, resulting in no additional fiscal impact on the General Fund. The table below outlines the departmental funding contributions.
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The departments identified above have sufficient vacancy savings to support this effort.
If approved, the item would authorize the transfer of funding to the Community Assistance Fund – Contract Services account established to track program expenses.
Adjustments to Other Funds
Lay’s Replay Tournament Donation
The Parks, Recreation & Community Services (PRCSA) department requests to recognize $34,872 in donation revenue and appropriate the same amount in expenditures to offset the costs associated with a free tournament at Campesino Park’s Lay’s Replay mini pitch. The tournament was held in April and May, and the tournament winners qualified for the chance to attend a 2026 FIFA World Cup match.
Criminal Activities Fund
An appropriation of $5,000 from the Criminal Activities Fund balance is requested to support Police Department investigation costs. This fund consists of proceeds from state asset forfeitures and accumulated interest earnings. In accordance with applicable restrictions, these funds cannot supplant local funding sources and are generally limited to supporting eligible law enforcement activities.
Emergency Rental Assistance (ERA) Fund
Community Development staff is requesting approval to recognize $6,277 in revenue from accumulated interest earnings within the Emergency Rental Assistance (ERA) Fund and to appropriate the same amount in expenditures. The ERA program provided rental assistance to residents during the height of the COVID-19 pandemic. While original program funds have been fully expended and the fund is scheduled to close at the end of the fiscal year, interest earnings have continued to accrue.
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The City uses Neighborly, a cloud-based platform, to maintain electronic application records for prior City-administered rental assistance programs, including ERA and the Eviction Prevention Program. Federal grant requirements mandate that these records be retained for five years after the end of the period of performance (September 30, 2025), or until the final report is submitted to the U.S. Treasury, whichever is later. To ensure continued compliance and access to these records, the City must maintain an annual Neighborly subscription costing $15,480. A portion of this expense will be covered by the $6,277 in accrued interest earnings. The remaining balance, as well as future subscription costs, will be funded through alternative sources.
Rental Registry Fund
Rental Registry staff continues to manage growing demand for core Rent Stabilization services, including Tenant Petitions, Fair Return Petitions, Public Records Requests (PRRs), outreach initiatives, and general public inquiries. This increased workload has created the need for additional staffing to support program administration and legal services, while also increasing operating costs for materials, office modernization, and upgraded communication infrastructure.
Staff anticipates Rental Registry Fee revenues to remain consistent with FY 2024–25 levels at approximately $3.1 million. Accordingly, staff is increasing the Rental Registry Fee revenue estimate by $700,000 and recognizing $40,000 in late fee revenue, bringing total revised revenues to $3,182,060. To ensure the Rent Stabilization Program can continue delivering high quality and reliable services, staff recommends appropriating these funds for corresponding personnel, operational, and service related expenditures.
With these adjustments, the Rental Registry Fund remains balanced.
Citywide Vacancy Report
The Citywide vacancy rate as of March 31, 2026, remains unchanged at 13%, consistent with the Mid-Year Vacancy Report covering vacancies through December 31, 2025. This stability indicates that overall staffing levels have remained steady throughout the third- quarter reporting period. The March 31, 2026, Vacancy Report is presented in Exhibit 2.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The overall estimated impact to the General Fund is immaterial, resulting in a net increase of $1,566 to the Spendable Fund Balance through June 30, 2026. Exhibit 1 provides a detailed listing of the line-item adjustments to revenue estimates and the corresponding recommended changes to appropriations.
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EXHIBIT(S)
1. Line Item Adjustments to Various Revenue and Expenditure Accounts
2. Citywide Vacancy Report as of March 31, 2026
Submitted By: Alexander Trinidad, Executive Director, Finance and Management Services Agency
Approved By: Alvaro Nuñez, City Manager