CITY OF SANTA MARIA
Proposed Amended
FY 2025-26 Budget
JUNE 3, 2025
RECOMMENDATION
Adopt a Resolution approving amendments to the Fiscal
Year 2025-26 Mid-Cycle City Budget, and delegating the
City Manager to implement the same
Financial Planning Process – Two Year Financial Plan
February 2023,
Council Goal Setting
Session
June 2024, Two-
Year Financial Plan
Adoption
June 2025, Mid-
Cycle
FY 2025-26
Budget
Amendment
Budget Process
Council 2024-26 Priorities
New
approach to
economic
development
Provide youth
opportunities
Provide
Public Safety
Resources
Establish a
Staffing Plan
Budget Process
Citywide Proposed Budget
• June 18, 2024:
– FY 2024-25 and FY 2025-26 Budgets Adopted
• FY 2024-25 adopted as balanced using short-term strategies – Use of one-time reserves from General Fund, Measure U, and Local Economic Augmentation Fund (LEAF)
• FY 2025-26 adopted as unbalanced due to budgeted depletion of General Fund and Measure U reserves in FY 2024-25
• City Council directed staff to return with long-term budget strategy recommendations to close ongoing budget deficit and avoid relying on use of one-time reserves
FY 2024-26 Adopted Biennial Budget
• General Fund and Measure U Fund Adopted Budgets
FY 2024-26 Adopted Biennial Budget
FUND ANALYSIS – GENERAL FUND & MEASURE U
GENERAL FUND MEASURE U FUND
(in thousands)
FY 2024-25
Adopted
FY 2025-26
Adopted
FY 2024-25
Adopted
FY 2025-26
Adopted
Beginning Fund Balances $ 8,570 $ - $ 4,414 $ -
Revenues 91,813 93,420 26,716 26,886
Cancelled Reserves 8,336 - - -
Total Financing Sources $ 108,719 $ 93,420 $ 31,130 $ 26,886 Expenditures (108,719) (109,102) (31,130) (31,443)
Ending Fund Balances $ - $ (15,682) $ - $ (4,557)
Budget Balancing Analysis
• July – August 2024: Budget balancing exercise
– City departments analyzed service level impacts of reductions taken across-the-board;
– Explored revenue options
– Identified $16.7 million, or 14 percent, of operational General Fund appropriations
• Summary of findings presented to City Council on October 1, 2024:
– Tier 1 Reductions: Moderate Impact to Operations
– Tier 2 Reductions: Significant Impacts to Non-Public Safety Services • Tiers 1 and 2 amounted to $4.3 million in ongoing reductions – Tier 3 Reductions: Significant Impacts to Services, Including Public Safety
• Tier 3 amounted to $10.5 million in ongoing reductions • City Manager placed into effect a “hiring chill” policy for the General Fund, except public safety departments
• Previously adopted FY 2025-26 appropriations for all funds totaled $346.9 million
• Proposed Amended Mid-Cycle appropriations total $407.8 million – FY 2024-25 year-end estimates calls for less reserves (use of General Fund reserves for unfunded liability pension payments and draw from Local Economic Augmentation Fund) from $8.3 million to $3.6 million FY 2025-26 Proposed Budget – All Funds
FUND ANALYSIS – ALL FUNDS
(in thousands)
FY 2024-25
Adopted
FY 2025-26
Adopted
FY 2024-25
Estimates
FY 2025-26
Proposed
Beginning Fund Balances $ 261,656 $ 221,488 $ 417,621 $ 288,701 Cancelled Reserves 8,336 - 3,607 -
Revenues 315,472 324,672 345,309 337,716
Total Financing Sources $ 585,464 $ 546,160 $ 765,537 $ 626,417 Expenditures (363,976) (346,865) (477,836) (407,797)
Ending Fund Balances $ 221,488 $ 199,295 $ 288,701 $ 218,620 Proposed Budget by Department – All Funds
• Previously adopted FY 2025-26 appropriations for the General Fund totaled $140.6 million; recommended Mid-Cycle appropriations total $147.6 million FY 2025-26 Proposed Budget – General Fund (Including Measure U) FUND ANALYSIS – GENERAL FUND & MEASURE U
(in thousands)
FY 2024-25
Adopted
FY 2025-26
Adopted
FY 2024-25
Estimates
FY 2025-26
Proposed
Beginning Fund Balances $ 12,984 $ - $ 22,236 $ 1,319
Cancelled Reserves - - 3,607 -
Revenues 126,865 120,307 117,369 121,102
Total Financing Sources $ 139,849 $ 120,307 $ 143,212 $ 122,421 Expenditures (139,849) (140,545) (141,893) (147,556)
Ending Fund Balances $ - $ (20,238) $ 1,319 $ (25,135)
FY 2025-26 Proposed Budget – General Fund (Including Measure U) • Fund balance estimates were updated
• FY 2024-25 year-end estimates result in the full use of General Fund Fund Balance and leaves a balance for Measure U of $1.3 million FUND ANALYSIS – GENERAL FUND & MEASURE U
GENERAL FUND MEASURE U FUND
(in thousands)
FY 2024-25
Adopted
FY 2024-25
Estimates
FY 2024-25
Adopted
FY 2024-25
Estimates
Beginning Fund Balances $ 8,570 $ 10,072 $ 4,414 $ 12,164 Revenues 91,813 91,664 26,716 25,705
Cancelled Reserves 8,336 3,607 - -
Total Financing Sources $ 108,719 $ 105,343 $ 31,130 $ 37,869 Expenditures (108,719) (105,343) (31,130) (36,550)
Ending Fund Balances $ - $ - $ - $ 1,319
• Revenue estimates were prepared in February 2025
– Objective, analytical process based on year-to-date trends, prior years’ data, and anticipated one-time adjustments
– Refer to Attachment B for a summary of previously adopted and proposed amended revenues
FY 2025-26 Proposed Budget – General Fund (including Measure U)
GENERAL FUND & MEASURE U REVENUES
(in thousands)
FY 2025-26
Adopted
FY 2025-26
Proposed Variance
Percent
Change
Revenues & Transfers In
Taxes $ 96,989 $ 97,673 $ 684 0.7%
Licenses, Permits & Fines 3,323 3,804 481 14.5%
Revenues from Use of Money & Property 3,131 3,148 17 0.5% Revenues from Other Agencies 574 607 33 5.8%
Charges for Service 7,517 7,059 (457) -6.1%
Other Revenue and Transfers 8,773 8,811 38 0.4%
Total Revenues & Transfers In $ 120,307 $ 121,102 $ 796 0.7% • Expenditure estimates were prepared in February 2025
– FY 2025-26 appropriations (expenses) reflect known factors such as employee Memoranda of Understanding (MOUs), insurance premiums, and contractual obligations
FY 2025-26 Proposed Budget – General Fund (including Measure U)
GENERAL FUND & MEASURE U APPROPRIATIONS
(in thousands)
FY 2025-26
Adopted
FY 2025-26
Proposed Variance
Percent
Change
Expenses & Transfers Out
Salaries & Benefits $ 103,084 $ 109,943 $ 6,859 6.7%
Services & Supplies 28,956 30,145 1,189 4.1%
Capital & Outside Agencies 1,820 2,451 631 34.7%
Debt Service 267 267 0 0.0%
Transfers 6,418 4,750 (1,668) -26.0%
Total Expenses & Transfers Out $ 140,545 $ 147,556 $ 7,011 5.0%
SUMMARY OF PROPOSED APPROPRIATIONS
PREVOUSLY MID-CYCLE
ADOPTED ESTIMATED ADOPTED PROPOSED INCREASE/
2024-25 2024-25 2025-26 2025-26 (DECREASE)
GENERAL FUND:
Mayor & Council $ 210,716 $ 210,716 $ 227,015 $ 299,358 $ 72,343 City Attorney 1,816,866 1,821,674 1,878,493 1,975,752 97,259 City Manager 11,626,021 11,316,381 11,917,704 12,991,048 1,073,344 Finance 15,203,664 14,193,729 12,229,624 11,451,833 (777,791) Community Development 6,090,768 7,251,939 6,354,137 6,880,630 526,493 Recreation & Parks 12,988,690 12,835,634 13,228,980 13,518,353 289,373 Fire 13,762,535 13,300,896 14,195,037 15,281,873 1,086,836 Police 41,626,826 38,964,623 43,405,481 46,328,230 2,922,749 Public Works 5,392,822 5,447,233 5,665,389 6,213,438 548,049 Sub-Total General Fund $ 108,718,908 $ 105,342,825 $ 109,101,860 $ 114,940,515 $ 5,838,655 MEASURE U FUND:
Police $ 12,835,790 $ 12,869,674 $ 13,568,555 $ 14,161,740 $ 593,185 Fire 11,945,878 17,163,767 12,561,827 13,014,868 453,041 Recreation & Parks 3,071,312 3,254,463 3,152,287 3,216,641 64,354 Library 1,014,709 1,014,709 1,025,970 1,015,154 (10,816) Community Development 824,287 824,287 884,148 953,525 69,377 City Attorney - - - - -
City Manager 1,435,220 1,420,220 247,700 251,401 3,701
Finance 2,757 2,757 2,757 2,757 -
Sub-total Measure U Fund $ 31,129,953 $ 36,549,877 $ 31,443,244 $ 32,616,086 $ 1,172,842 Total General Funds $ 139,848,861 $ 141,892,702 $ 140,545,104 $ 147,556,601 $ 7,011,497 FY 2025-26 Proposed Budget by Department – General Fund • Refer to Attachment C for a summary of previously adopted and proposed amended appropriations by department
• The Full-Time Equivalent (FTE) count reflects those changes in positions implemented by the City Manager and through other City Council actions • Full-time and part-time positions by department are summarized in Attachment F
FY 2025-26 Proposed Budget – Citywide Personnel Overview POSITION ALLOCATION BY FUND – ALL FUNDS
FY 2025-26
Adopted
FY 2025-26
Amended
Fund FTE FTE
General Fund 361.52 361.27
Measure U Fund 137.60 137.60
Enterprise and other funds 233.28 242.73
Total 732.40 741.60
• LEAF is a reserve fund made up of one-time General Fund operating surplus (revenues that exceed expenditures) set-aside at year-end • Amount reserved in LEAF will be limited to 5 percent of General Fund and Measure U operating appropriations
• Intent is to be used as a “gap financing” mechanism during downturns in the local economy.
FY 2025-26 Proposed Budget – Local Economic Augmentation Fund • The City transferred $8.9 million
out of LEAF in FY 2023-24 for
General Fund operations and
capital projects
• Upon reviewing year-end results, it
is anticipated $3.6 million will be
deposited back into LEAF
• Supplemental Budget Requests (SBRs)
– SBRs Requested: 61
– SBRs Recommended: 46
• Recommended SBRs by fund and department are
summarized in Attachment G
• Most General Fund and Measure U requests remain on
hold
• Some Reclassification Requests are recommended to
move forward upon further review by the City Manager
FY 2025-26 Proposed Budget – Supplemental Budget Requests FY 2025-26 Proposed Budget – Supplemental Budget Requests
SUPPLEMENTAL BUDGET REQUESTS
(in thousands) Ongoing One-Time
General Fund $ 129 $ -
Water Fund 877 8
Wastewater Fund 700 5
Solid Waste Collection Fund 517 1
Solid Waste Disposal Fund 893 5
Library Fund 35 -
Equipment Fund - 3,397
Fleet Services Fund 206 -
Assessment Districts - -
Public Transit 1,358 -
Insurance Funds – General Liability 1,990 -
Insurance Funds – Workers’ Comp. 4,085 -
Total $ 10,790 $ 3,416
• Public Utilities
– Water
• Purchase of Backflow Assemblies for Construction Water Meters • Sewer Upgrades and/or Replacement on West Morrison Street – Wastewater
• Replacement of 9 Digester Gas Sensors @ Wastewater Treatment Plant (WWTP)
• Replacement of Diesel Fuel Tank @ WWTP
– Solid Waste
• Modular Building @ Santa Maria Regional Landfill (SMRL) • Design for Surveillance System to Provide Site Security @ SMRL FY 2025-26 Proposed Amended Budget – Capital, Maintenance, and Equipment Projects
• Public Ways & Facilities
– Re-roof Old Police Department / Enterprise Resource Planning (ERP) Building – Roof Repairs: Recreation & Parks
• Location: Abel Maldonado Youth Center
– Heating, Ventilation, Air Conditioning Replacement for Police Department Computer Center
– Police Department Fleet Opticom
– Citywide Annual Pavement Condition Index (PCI)
– Space Needs Assessment Phase II
– Highway Safety Improvement Project (HSIP) Intersection Improvements • Transit
– Transit Administration Building
– Autonomous Shuttle Station on Jones St.
FY 2025-26 Proposed Amended Budget – Capital, Maintenance, and Equipment Projects
• Leisure & Cultural Services
– Fletcher Park Irrigation Upgrades
– Minor Renewals @ Recreation & Park Facilities / Buildings – Pool House Rehabilitation
– Replace Aging Shares & Sun Screens @ City Parks
– Park Renovations
– RV Hookup for Park Hosts
– Sign / Façade Restoration Program
– Elks Field Lighting
– Parking Lot Rehabilitation @ Elwin Mussell Senior Center FY 2025-26 Proposed Amended Budget – Capital, Maintenance, and Equipment Projects
Proposed Policy Recommendations
Proposed Budget Balancing Policy Recommendations
• Proposed FY 2025-26 General Fund appropriations (including Measure U) are $147.6 million (Increase of $7.0 million)
– Revenues are forecast to fall short of operational and capital expenses by $26.4 million
– The draw of $1.3 million of Measure U reserves leaves a gap of $25.1 million to be closed
• Staff Recommended Actions:
1. Cancel additional General Fund reserves for unfunded liability pension payments: $5.9 million + $25K for Homeless Encampment Cleanup
2. Cancel the balance of LEAF reserves: $22.7 million
o $14.4 million to balance General Fund
o $4.8 million to balance Measure U Fund
o $3.5 million to balance General Fund Capital Projects Fund ENDING FUND BALANCE – GENERAL FUND
(in thousands)
FY 2024-25
Beginning
FY 2024-25
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 7,650 $ - $ (7,650) -100.0%
Assigned for Carryovers 2,422 - (2,422) -100.0%
Economic Stabilization 19,800 19,800 - 0.0%
Post Employment Benefits 6,248 6,248 - 0.0%
Unfunded Pension Benefits 13,147 9,959 (3,188) -24.2%
Total $ 49,267 $ 36,007 $ (13,260) -26.9%
Fund Balance – General Fund
ENDING FUND BALANCE – GENERAL FUND
(in thousands)
FY 2025-26
Beginning
FY 2025-26
Ending Variance
Percent
Change
Assigned to:
Unassigned $ - $ - $ - 0.0%
Assigned for Carryovers - - - 0.0%
Economic Stabilization 19,800 19,800 - 0.0%
Post Employment Benefits 6,248 6,248 - 0.0%
Unfunded Pension Benefits 9,959 4,037 (5,922) -59.5%
Total $ 36,007 $ 30,085 $ (5,922) -16.4%
ENDING FUND BALANCE – MEASURE U FUND
(in thousands)
FY 2024-25
Beginning
FY 2024-25
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 5,824 $ 1,319 $ (4,505) -77.4%
Assigned for Carryovers 6,340 - (6,340) -100.0%
Total $ 12,164 $ 1,319 $ (10,845) -89.2%
Fund Balance – Measure U Fund
ENDING FUND BALANCE – MEASURE U FUND
(in thousands)
FY 2025-26
Beginning
FY 2025-26
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 1,319 $ - $ (1,319) -100.0%
Assigned for Carryovers - - - 0.0%
Total $ 1,319 $ - $ (1,319) -100.0%
ENDING FUND BALANCE – LEAF
(in thousands)
FY 2024-25
Beginning
FY 2024-25
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 23,076 $ 22,656 $ (420) -1.8%
Total $ 23,076 $ 22,656 $ (420) -1.8%
Fund Balance – Local Economic Augmentation Fund (LEAF)
ENDING FUND BALANCE – LEAF
(in thousands)
FY 2025-26
Beginning
FY 2025-26
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 22,656 $ - $ (22,656) -100.0%
Total $ 22,656 $ - $ (22,656) -100.0%
Next Steps
• Finance Department and all City Departments will engage in a rebalancing initiative that develops a plan to address the structural deficit, entailing:
– Revisiting FY 2024-25 Year-End Estimates
– Vacant Position evaluation: review of persistent vacancies and chilled positions – Departmental budget re-evaluation: review of all revenues and expenses – Financial/Budget Policy Review
– Review Capital Outlay Project expenses that may be held – Revenue generation opportunity evaluation: look into potential revenue- generation initiatives
– Development of short- and long-term rebalancing initiatives that resolve the structural deficit and assist with strategic planning for the future – Establish a City Council ad-hoc committee for the rebalancing initiative. Staff will bring back a request to establish this ad-hoc committee at a future City Council meeting
• Staff plans to return in the fall with an update to the City Council on the plan to move forward
RECOMMENDATION
Adopt a Resolution approving amendments to the Fiscal
Year 2025-26 Mid-Cycle City Budget, and delegating the
City Manager to implement the same