QUARTERLY
FINANCIAL
REPORT
THIRD QUARTER ENDED
MARCH 31, 2025
ATTACHMENT B
1 MAYOR
Alice Patino
MAYOR PRO TEM
Carlos Escobedo
COUNCIL
Gloria Soto
Maribel Aguilera-Hernandez
Gloria Flores
CITY MANAGER
David W. Rowlands
REPORT PREPARED BY
Rebecca Campbell
Director of Finance
206 East Cook Street
Santa Maria, CA 93454
(805)925-0951 Ext. 2215
www.cityofsantamaria.org
QUARTERLY
FINANCIAL
REPORT
CITY OF SANTA MARIA, CA
V
TABLE OF CONTENTS
ECONOMIC INDICATORS ................................................... 1 GENERAL FUND ................................................................ 2 MEASURE U FUND ............................................................. 6 ENTERPRISE FUNDS ............................................................ 7
WATER/WASTEWATER FUND
SOLID WASTE FUNDS
PUBLIC TRANSIT FUNDS
FY 2024-26 BIENNIAL BUDGET .......................................... 8 FUND BALANCE ................................................................ 8
GENERAL FUND
MEASURE U FUND
Quarterly Financial Report: Third Quarter Ending March 31, 2025
1 ECONOMIC INDICATORS
The economy slowed in the first quarter (January -March 2025) but the long-resilient job market continued to hold steady. The economy shrank at an annual rate of negative 0.3 percent in the first quarter, marking the first decline in three years. This followed a healthy 2.4 percent growth in the fourth quarter (October-December 2024). Inflation slowed ma rginally and home prices continued to climb.
Experts attribute the contraction to a surge in imports as businesses stocked up before Trump’s tariffs took effect. Overall U.S. imports were up over 41 percent for the quarter with goods imports jumping more than 50 percent over the period. Import s count against the GDP calculation because the category represents spending on foreign-made goods and services.
Economists predict slower economic growth later this year, with some forecasting a mild recession due to tariffs. Consumer spending, which powers about 70 percent of the economy, slowed sharply in the first quarter to a 1.8 percent rate, down considerab ly from 4 percent in the prior three-month period.
That slowdown was largely due to Americans cutti ng their spending on goods and was the weakest rate since mid-2023.
Unemployment remained relatively low at 4.2 percent as of March. The jobless rate has remained in a narrow range of 4.0 to 4.2 percent since May 2024. The number of unemployed people stood at 7.2 million in March. Santa Maria’s jobless rate in March was 8.1 percent (4,500 people), and Santa Barbara County’s unemployment rate was 4.9 percent (10,900 people).
Central banks continued to maintain a cautious stance on interest rates during the first quarter. The Federal Reserve kept its benchmark interest rate at 4.25-4.50 percent, signaling a wait-and-see approach amid improving economic conditions. The decision was based on a mix of solid GDP growth and inflation that, while still above target, showed signs of easing. While inflationary pressures moderated, there was concern about wage growth an d housing prices keeping inflation higher than desired.
Inflation was 2.4 percent for the 12 months ending in March. Inflation eased more than expected to a five-month low in March as gasoline and used car prices tumbled and rent increases softened further, offsetting a sharp rise in grocery costs. Many Americans are questioning what the tariffs announced in April will do to their wallets.
California’s economic output has surpassed $4 trillion a year as of 2024 and in so doing has surpassed Japan to become the world’s fourth-largest economy, surpassed only by the United States, China, and Germany. The Golden State, however, continues to ex perience chronic multi-billion dollar deficits, its unemployment rate of 5.3 percent in March is the th ird-highest in the nation with more than a million jobless workers (1,054,200), and its housing costs are averaging more than $880,000.
California home sales dialed back slightly in March as consumers grow increasingly concerned about their financial outlook in the year ahead. With tariff threats and recession fears growing and home buyer optimism fading, home sales could remain soft in the months ahead. Pending home sales across the state declined in March for the fourth straight month, reflecting continued weakening in housing sentiment. Fluctuating mortgage rates and rising recession fears likely contributed to the drop in demand. With rates expected to remain volatile, pending sales may stay soft as the spring homebuying season begins.
The March statewide median price climbed 6.7 percent from $829,060 in February to $884,350 in March and 3.5 percent from $854,370 in March 2024. The year-over-year increase was the 21 st straight month
of price gains, but the improvement continued to be mild.
Quarterly Financial Report: Third Quarter Ending March 31, 2025
2 ECONOMIC INDICATORS (CONTINUED)
At the regional level, all five major California regions registered a median price increase from last year, but the increases were mild except for one region . The Central Coast region, again, had the largest price growth from a year ago at a jump of 16.6 perc ent, as prices in both Santa Barbara and San Luis Obispo counties within the region surged by double-digits. The median number of days it took to sell a California single-family home was 22 days in March, up from 18 days in March 2024.
GENERAL FUND
Budget:
The table below presents the budget as adopted and amended along with expenditures through March 31, 2025. General Fund appropriations adopted on June 18, 2024, were $108.72 million compared to budgeted sources of $100.15 million, inclusive of an $8.34 million draw from the Local Economic Augmentation Fund (LEAF) as a revenue source, and the use of $8.57 million of available General Fund balance. At the end of FY 2023- 24 there were several projects, contracts, and transactions that were not yet completed. The re maining appropriations for those have been carried forward into FY 2024-25. Current General Fund appropriations are $112.01 million compared to budgeted sources of $98.70 million, inclusive of a $5.15 million draw from the LEAF as a revenue source, and the use of $13.31 million of available General Fund balance.
GENERAL FUND
(in thousands)
Adopted
Budget
Current
Budget
2024-25
Actual
Percent of
Current Budget
Revenues & Transfers In
Sales Tax $ 31,872 $ 31,872 $ 23,211 72.8%
Property Tax 26,498 26,498 14,694 55.5%
Hotel/Bed Tax 4,274 4,274 2,517 58.9%
Licenses, Permits & Fees 3,196 3,196 4,499 140.8% All Other Revenues 34,309 32,863 25,494 77.6%
Total Revenues & Transfers In $ 100,149 $ 98,703 $ 70,415 71.3%
Expenses & Transfers Out
Staffing $ 73,048 $ 73,028 $ 48,198 66.0%
Contracts & Services 10,184 12,353 7,311 59.2%
Materials & Supplies 4,257 4,463 3,620 81.1%
Maintenance & Operations 10,835 10,860 7,990 73.6%
Capital Outlay 1,800 2,501 1,979 79.1%
Debt Service 267 267 267 100.0%
Transfers 8,328 8,538 7,085 83.0%
Total Expenses & Transfers Out $ 108,719 $ 112,010 $ 76,450 68.3%
KEY STATISTICS
Quarterly Financial Report: Third Quarter Ending March 31, 2025
3 GENERAL FUND (CONTINUED)
Year-Over-Year Comparison:
The chart below compares revenue receipts, expenditures, and transfers through the third quarter ending March 31, 2025, versus the third quarter ending March 31, 2024.
Major Revenues:
Through the third quarter, receipts for four major General Fund revenue sources (Sales Tax, Property Tax, Hotel Tax, and Licenses, Permits, & Fees) are at 68.2 percent of projections and account for 63.8 percent of total General Fund revenues.
Revenue Variances:
Revenues are higher than the third quarter receipts from the prior year primarily due to property tax, sales tax and licenses, permits & fees. The following highlights what is driving the variances in these individual revenue sources received through the third quarter:
Property Tax : The bulk of these payments are received through Santa Barbara County in December, January, April, and May of each year. Property Tax received is 4.2 percent, or $597 thousand more than that received in the same period last fiscal year. Sales Tax: The chart below displaying activity by major business group as of the second quarter of FY 2024-25, reflects total sales taxes coming in 2.0 percent, or $162 thousand, less than the
Quarterly Financial Report: Third Quarter Ending March 31, 2025
4 GENERAL FUND (CONTINUED)
second quarter of FY 2023-24. Due to conc erns about the economy, consumers reduced spending in the General Consumer Goods category.
Receipts through the third quarter of FY 2024- 25 are 0.9 percent, or $213 thousand, more than those for the same period last year.
Hotel/Bed Tax: Through March, Transient Occupancy Tax (TOT) receipts are 2.6 percent, or $67 thousand, less than last fiscal year and behind estimates by 16.1 percent, or $688 thousand. Licenses, Permits, & Fees: Revenue of $4.50 million through the third quarter exceeds projections by 65.8 percent, or $2.10 million, and is 61.5 percent, or $1.71 million, more than that through the third quarter of FY 2023-24. This is due to a ma rked increase in development, including strong commercial activity as well as Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs). ADUs have continued to increase in popularity, with the number of permits issued outpacing those issued last year by 25 percent. The proliferation of ADUs in Santa Maria is among the highest in the state on a per-capita basis, wi th unit counts exceeding those of cities with much larger populations. Permit activity is an ticipated to continue to exceed projections throughout the current fiscal year as developm ent remains strong and housing prices remain high, driving residents to seek more affordable alternatives.
Expenditures:
Through the third quarter, operating expenditures, excluding debt service and transfers, are at 67.0 percent of total budget. Expenditures, as shown above in the Expenditure Categories chart above on the right, are trending within budget except for Materials & Supplies.
Expenditure Variances:
Financial Reporting policies require an explanation of variances greater than 5 percent of major categories and departmental variances greater than 10 percent.
Quarterly Financial Report: Third Quarter Ending March 31, 2025
5 GENERAL FUND (CONTINUED)
Staffing: Under budget by 9.0 percent, or $6.57 million, due to vacancies mostly experienced in the Police and Fire departments, as well as overtime savings for the Fire Department, mostly due to the over hire of Firefighter positions in antici pation of staffing new Engine 6. Recruitments of lateral and entry positions continue to be the Police Department’s focus to fill 33 vacancies. The Fire Department has eight vacant positions.
Contracts & Services : Under budget by 15.8 percent, or $1.95 million, due to timing of the General Plan Update project and the payment fo r contractual services with Santa Barbara County for Animal Control Services.
Materials & Supplies : Over budget by 6.1 percent, or $272 thousand, due to a significant increase in the amount of watering required of the Recreation & Parks Department necessitated by Senate Bill (SB) 1383, which requires the spreading of a pre-defined amount of compost each year. Once placed at appropriate depths the co mpost needs to be watered regularly until it has been locked into the ground. As of December 31, irrigation has been shut off at all parks, except those areas with new vegetation that will require ongoing irrigation. Debt Service: Over budget by 25.0 percent, or $67 th ousand, due to the timing of debt service payments.
Transfers Out: Over budget by 8.0 percent, or $682 thousand, due to timing of the transfers from the General Fund to other funds as approved in the adopted budget. The General Fund subsidy of the Library Fund is anticipated to be under budget due to savings from vacant positions.
The chart below presents the percentages of expenditures by department. Community Development: Under budget by 17.7 percent, or $1.28 million, due to timing of the General Plan Update project and the payment fo r contractual services with Santa Barbara County for Animal Control Services.
Fire Department: Under budget by 14.9 percent, or $2.16 million, due to vacancies, as well as overtime savings mostly due to the over hire of Firefighter positions in anticipation of staffing new Engine 6.
Quarterly Financial Report: Third Quarter Ending March 31, 2025
6 MEASURE U FUND
The table below presents the budget as adopted and amended along with actual expenditures as of March 31, 2025. Measure U Fund appropriations adopted on June 20, 2024, were $31.1 million compared to budgeted sources of $26.7 million and the use of $4.4 million of available Measure U Fund balance. Current Measure U Fund appropriations are $37. 6 million compared to budgeted sources of $26.7 million and the use of $10.9 million of available General Fund balance.
MEASURE U FUND
(in thousands)
Adopted
Budget
Current
Budget
2024-25
Actual
Percent of
Current Budget
Revenue $ 26,716 $ 26,716 $ 19,723 73.8%
Expenses
Community Development $ 824 $ 824 616 74.7%
City Manager’s Office 1,435 1,435 753 52.4%
Finance 3 3 - 4.4%
Library 1,015 1,015 724 71.4%
Recreation & Parks 3,071 3,489 2,057 58.9%
Fire 11,946 17,939 8,404 46.8%
Police 12,836 12,870 9,555 74.2%
Total Expenses $ 31,130 $ 37,575 $ 22,109 58.8%
Revenues received through the third quarter are at 73.8 percent of budget, or $19.7 million.
Expenditures are at 58.8 percen t of budget, or $6.1 million under budget, primarily due to capital project activity and a delay in the operation of Regional Dispatch noted below.
The City Manager’s Office budget includes costs of maintaining the City’s mass notification system database, a position for the Public, Education, an d Government (PEG), and the Motorola Backhaul Refresh and Refresh of CAD/RMS capital projects. Th e Finance budget is for the annual independent audit of Measure U financial activity. The Fire Department budget includes the City’s proportional cost of participating in the Regional Dispatch, which was anticipated to begin in early 2025 but is now expected to begin in May 2025, as well as fundin g for the Fire Station 1 Expansion project and fleet expenses.
Through March, Measure U expended 86.9 percent on Public Safety, 5.5 percent on Youth Services, and 7.6 percent on Quality of Life.
Quarterly Financial Report: Third Quarter Ending March 31, 2025
7 ENTERPRISE FUNDS
The Statement of Revenues and Expenses through the third quarter ending March 31, 2025, for the three enterprise funds, are shown in the table below.
ENTERPRISE FUNDS
(in thousands)
Water /
Wastewater
Solid
Waste
Public
Transit
Revenues
Charges for Service $ 43,443 $ 25,718 $ 477
Interest Income 1,782 757 130
Other Revenue 1,739 333 7,099
Total Revenues $ 46,964 $ 26,808 $ 7,706
Expenses
Operating $ 12,853 $ 23,372 $ 5,362
Capital 3,511 14,901 2,215
State Water Payment 18,532 - -
Debt Service 3,622 - -
Total Expenses $ 38,518 $ 38,273 $ 7,577
Revenues/Expenses $ 8,446 $ (11,465) $ 129
Water/Wastewater Funds:
Revenues exceeded expenditures by $8. 5 million, which is $1.6 million less than last year. Revenues increased 1.5 percent, or $675 thousand, compared to the prior year due to higher sewer service ch arges (+7.8%, or $3.1 million) offset by lower revenues generated through sales of metered water (-62.3%, or $2.9 million). Expenses are $2.3 million more than last year. Water and Wastewater operational expenses are under budget by 49.0 percent due to personnel savings from vacant positions and timing of maintenance and contractual agreements.
Solid Waste Funds:
The Solid Waste Fund reports refuse collection and disposal activities. Solid Waste revenues were $11.5 million less than expenditures. Operational costs are under budget by 9.5 percent, or $3.4 million due to personnel savings from vacant positions and timing of maintenance and contractual agreements.
Public Transit Funds:
The City operates the Santa Maria Regional Transit (SMRT) and Breeze Transit systems, which are funded by a combination of Federal grants, State transportation funds, and user fares. Fare revenue is $478 thousand, which is about $31 thousand more than last year. The farebox ratio is 8.9 percent based on fares received and operating expenses recorded to date.
Quarterly Financial Report: Third Quarter Ending March 31, 2025
8 FY 2025-26 MID-CYCLE BUDGET REVIEW
The City is currently developing the FY 2025-26 Mi d-Cycle Budget Review. Public engagement will be encouraged at the City’ Council’s meeting on June 3, 2025, during which budget presentations and discussion will be conducted and feedback receiv ed. Get the latest information on the public meetings related to the development of the FY 2024- 26 biennial budget by visiting the City’s website at: https://www.cityofsantamaria.org/services/departments/city-clerk-records/agendas-reports- meeting-videos.
GENERAL FUND & MEASURE U FUND BALANCE SUMMARY
General Fund:
The table below shows revenues are at 71.3 percen t of projections while expenditures are at 68.3 percent of appropriations through the third quarter of Fiscal Year 2024-25.
GENERAL FUND
(in thousands)
Adopted
Budget
3rd Quarter
Percent
Beg. Fund Bal. $ 8,570
Revenues* 100,149 70,415 71.3%
Expenditures* 108,719 76,450 68.3%
Rev/Exp $ (8,570) $ (6,035)
It is important to note these are only estimates because the City’s annual audit for FY 2023-24 is not finalized.
Measure U Fund:
The table below shows revenues are at 73.8 percen t of projections while expenditures are at 58.8 percent of appropriations.
MEASURE U FUND
(in thousands)
Adopted
Budget
3rd Quarter
Percent
Beg. Fund Bal. $ 4,414
Revenues* 26,716 19,723 73.8%
Expenditures* 31,130 22,109 58.8%
Rev/Exp $ (4,414) $ (2,386)
It is important to note these are only estimates because the City’s annual audit for FY 2023-24 is not finalized.
This Page Intentionally Left Blank
MAYOR & COUNCIL
Gloria Soto
Councilmember
District 3
Maribel
Aguilera-
Hernandez
Councilmember
District 4
Alice Patino
Mayor
At-Large
Carlos
Escobedo
Councilmember
District 1
Gloria Flores
Councilmember
District 2
City of Santa Maria, California
110 E. Cook Street
Santa Maria, CA 93454
cityofsantamaria.org
EXPLORE
the City’s budget online at
www.cityofsantamaria.org/services/departments/city-manager-s-office/city-budget
CITY OF SANTA MARIA DISTRICTS
DISTRICT 2
Gloria Flores
DISTRICT 1
Carlos Escobedo
DISTRICT 3
Gloria Soto
DISTRICT 4
Maribel Aguilera-Hernandez