Report - Proposed Budget Amendments to the Fiscal Year 2026-27 Budget.pdf — Santa Maria City Council, September 15, 2026

COUNCIL AGENDA REPORT

TO: Mayor and City Council

FROM: Rebecca Campbell, Director of Finance

DATE: September 15, 2026

SUBJECT: Adoption of a Resolution Approving First Quarter Amendments to the Fiscal Year 2026-27 Budget

Description:

The City Council will consider adopting a Resolution approving proposed budget amendments to the Fiscal Year 2026-27 Budget.

Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.

RECOMMENDATION:

Adopt a Resolution Approving First Quarter Amendments to the Fiscal Year 2026 -27 Budget for Personnel, Operational, and Capital Changes.

BACKGROUND:

On June 16, 2026, the City Council adopted the Fiscal Year (FY) 2026 -28 Biennial Budget. While the FY 2026 -27 Adopted Budget sets forth the budget and approved programs for the fiscal year, from time-to-time the need to adjust the budget may occur.

DISCUSSION:

Through this report the Finance Department is submitting on behalf of the other departments several amendments to increase revenues and/or appropriations for operations and/or staffing needs. Each of the proposed amendments are discussed below.

PROPOSED AMENDMENTS FOR GENERAL FUND:
 Employee Wellness Initiatives : The Human Resources Division of the City Manager’s Office received two forfeiture checks from Navia Benefit Solutions for the Flexible Spending Account plan years ending December 31, 2024, and 2025.

Under the IRS’s “use it or lose it” rules, unused employee Flexible Spending Account contributions become plan experience gains and are returned to the employer once all participant claims and administrative cos ts have been paid.

Navia issued these checks to the City based on participants’ unused balances for both plan years. The revenue was received in FYs 2024-25 and 2025-26 so this 2 amendment will be funded with available fund balance in the General Fund. This proposed amendment will increase appropriations in the General Fund in the amount of $15,706 to support employee wellness initiatives.

 Contribution to the Santa Maria Valley Historical Society : The City Manager’s Office seeks to support the Santa Maria Va lley Historical Society operation and maintenance of the Historical Museum located at 616 South Broadway. Pursuant to the City’s agreement with the Society, the Society is responsible for operating and maintaining the museum, collecting and preserving arti facts related to local history and providing educational exhibits, tours and programs. The City Manager’s Office proposes $20,000 in funding to support the City’s ongoing partnership with the Society to preserve and promote the community’s historical and cultural resources. To cover this in the budget, the City plans to use fund ing received from the Vernon Property Group, LLC, for the sale and disposition of City- owned surplus land for the Perlman Project, approved by City Council on September 17 , 202 4. This proposed amendment will increase General Fund revenues by $110,100, and appropriations by $20,000 for the contribution to the Historical Society.

 Conversion of Treasurer’s Trust to Budget ed Revenues and Expenditures :

Approximately two years ago , a Treasurer’s Trust (a.k.a., escrow account) was created for the Building Division of the Community Development Department to track plan check services that cannot be performed in -house and are paid for through Building permit revenues. The accounting for revenu es and expenses in this manner has proven to be administratively burdensome and the Finance and Community Development departments have agreed that budgeting for these revenues and expenditures in a traditional manner would be more appropriate. The FY 2026-28 Biennial Budget incorporates this budgeting and accounting change for the Building Division. Community Development recently consulted with Finance regarding the Planning Division’s similar situation regarding on-call Planning services that cannot be performed in-house and are paid through permit revenues.

This proposed amendment will incorporate this budgeting and accounting change for the Planning Division by increasing revenues and appropriations in the General Fund in the amount of $60,000, respectively. Neither the change for Building in the existing budget nor the proposed change for Planning reflect an increase in expenses or in contract services; the change is merely a transition from Treasurer’s Trust accounting to traditional budgeting.

 Three-Year Term -Limited Staffing for Agreement with the Santa Maria Public Airport District for Supplemental Law Enforcement Services : On August 4, 2026, the City Council adopted a Resolution approving an agreement with the Santa Maria Public Airport District for supplemental law enforcement services. This agreement established an initial three -year term beginning August 4, 2026 , through June 30, 2029, with an automatic two -year renewal unless terminated or amended by the parties. The Santa Maria Police Department (SMPD) will provide sworn officers to satisfy Transportation Security Administration (TSA) law 3 enforcement officer requirements for scheduled commercial passenger departures while also providing proactive patrols, responding to crimes and call s for service, conducting investigations, and coordinating with Airport management, the Federal Aviation Administration (FAA), and TSA as appropriate. The Santa Maria Airport District will compensate the City $265,500 in FY 2026 -27 and compensation will increase by five percent (5%) annually to offset an increase in personnel, administrative, equipment, and operating costs. The action taken by the City Council only approved the agreement between the City and the Santa Maria Airport District. This proposed a mendment will increase General Fund revenues by $265,500, to account for the amount to be paid by the Santa Maria Airport District to the City, and appropriations by $165,000, to account for the allocation of one (1) Full -Time Police Officer position for a period of three years in alignment with the initial term of the agreement in the General Fund. The Police Officer position will be included in the budget in subsequent years so long as the agreement is not terminated or amended.

PROPOSED AMENDMENT FOR GENERAL FUND AND GENERAL CAPITAL FUND:
 Reallocate appropriation in the General Fund for Unforeseen Facility Repairs account to the General Capital Fund for an Unforeseen Maintenance, Repairs and Replacements Project: In FY 2023 -24 the Facilities Division in the Public Works Department identified the need for a contingency account for unforeseen maintenance or emergency repairs to City facilities that were not previously identified during the budget process. Since FY 2023 -24, the budget has included a $100,000 contingency in the General Fund for this purpose. At the start of this current fiscal year, there have been several repair requests, including one for the Police Department boiler room, HVAC repairs and replacements, and other urgent facility maintenance, some of which rise to the level of a capital project as opposed to an operational maintenance or repair. By creating a capital project in the General Capital Fund funded with a transfer in from the General Fund, the Facilities Division will be able to ali gn its response to the unforeseen needs with purchasing guidelines. This proposed amendment is comprised of the following:
o Conversion of the existing annual appropriation of $100,000 in the Unforeseen Facility Repairs account in the General Fund to a transfer out from the General Fund;
o Increase of the transfer in from the General Fund to the General Capital Fund by $100,000; and
o Increase appropriations in the General Capital Fund for the Unforeseen Maintenance, Repairs and Replacements Project.

PROPOSED AMENDMENT FOR WATER FUND:
 Wastewater Treatment Plant Locker Room Remodel : The existing men’s locker room at the Wastewater Treatment Plant (WWTP) does not provide adequate space to properly store and manage employee uniforms. Overcrowded storage makes it difficult to track inventory, audit the uniform vendor, and ensure staff have reliable access to required uniforms. This project will remodel the locker room to accommodate current organizational chart staffing and future grow th. This 4 proposed amendment will increase appropriations in the Water Fund by $75,000 for this project.

PROPOSED AMENDMENT FOR TRANSIT FUND:
 Electric Bus Purchase : The FY 2026 -28 Biennial Budget includes revenues and appropriations of $4.5 million each in FY 2026-27 and FY 2027-28 for the Transit Division of the Public Works Department to purchase six electric buses to support the City’s compliance with State mandate for the transition to zero emission transit vehicles by 2040. Transit currently has three active Federal Transit Administration (FTA) grant awards open and the project scope across these awards is now seven buses. Bus suppliers have a two-year delivery turnaround from the time a purchase order is issued . Transit is requesting this amendment to increase the number of buses to be purchased from six to seven , resulting in increasing revenues and appropriations to $10.5 million, respectively, in the Transit Fund for this purchase.

The $4.5 million budgeted in FY 2027 -28 will not be requested for this purpose during the FY 2027-28 Mid-Cycle Budget Update.

Fiscal Impact
The proposed budget amendments will result in the following increases and decreases in various accounts, as follows:

1. Increase appropriations for the Human Resources Division of the City Manager’s Office in the General Fund by $ 15,706 for employee wellness initiatives.
o Workday Worktags: FD100 General Fund | CC0420 Employment Services | SC4225 Contractual & Prof Svs. | A040011-Employee Wellness Initiative

2. Increase revenue in the Recreation & Parks Department, and appropriations for the City Manager’s Office in the General Fund by $20,000 for the Historical Society.
o Workday Worktags: FD100 General Fund | CC082 2 Recreation & Parks Facilities | RC 3235 Gain/Loss on Disposal of Asset-Other: $110,100 o Workday Worktags: FD100 General Fund | CC04 99 Citywide Non - Departmental-City Manager | SC8350 Contributions to Outside Agencies :
$20,000.

3. Increase revenues and appropriations for the Planning Division of the Community Development Department in the General Fund by $60,000, respectively, for on-call Planning services that are fully paid through permit revenues.
o Workday Worktags:

1. FD100 General Fund | CC0620 Community Development Planning | RC6003 Cost Recovery – Community Development: $60,000

2. FD100 General Fund | CC0620 Community Development Planning | SC4820 Reimbursement Programs: $60,000

4. Increase allocation of one (1) three-year term-limited Full-Time Police Officer to provide supplemental law enforcement services to the Santa Maria Public Airport District , as well as revenues and appropriations for the Operations Division of the Police Department in the General Fund.
5 o Workday Worktags:

1. FD100 General Fund | CC1020 Police Department Operations | RC6201 Reimbursements – Law Enforcement | PG104900 SM Airport Contract:
$265,500

2. FD100 General Fund | CC1020 Police Department Operations | Various Spend Categories | PG104900 SM Airport Contract: $165,000

5. Reallocate appropriation in the General Fund for Unforeseen Facility Repairs account to the General Capital Fund for an Unforeseen Maintenance, Repairs and Replacements Project by converting the appropriation in the General Fund to a Transfer Out to the General Capital Fund and increasing appropriations in the General Capital Fund, as follows:
o Conversion of the existing annual appropriation of $100,000 in the Unforeseen Facility Repairs account in the General Fund to a transfer out to the General Capital Fund;
 Workday Worktags:

1. FD100 General Fund | CC1150 Public Works Operations | SC3610 Unforseen Facility Repairs | PG112000 Public Works Buildings :
($100,000)

2. Workday Worktags: FD100 General Fund | CC0510 Finance Administration | SC9000 Capital Transfers Out: $100,000 o Increase of the transfer in from the General Fund to the General Capital Fund by $100,000 and increase appropriations in the General Capital Fund for the Unforseen Maintenance, Repairs and Replacements Project:
 Workday Worktags:

1. FD310 Capital Projects -General | CC0599 Citywide Non - Departmental – Finance | RC9010 Capital Transfers In: $100,000

2. FD310 Capital Projects-General | CC1150 Public Works Operations | SC7300 Structures & Structure Improvements | PG112000 Public Works Buildings | New Project: Unforseen Maintenance, Repairs and Replacements: $100,000

6. Increase appropriations for th e Utilities Water Distribution Division of the Utilities Department in the Water Fund by $75,000 for the Wastewater Treatment Plant Locker Room Project:
o Workday Worktags:
 FD620 Water | CC0280 Utilities Water Distribution | SC7300 Structures & Structure Improvements | New Project: Wastewater Treatment Plant (WWTP) Mens Locker Room Remodel

7. Authorize the purchase of a seventh bus and increase revenues and appropriations by $6 million, respectively, for the Transit Division of the Public Works Department in the Transit Fund.
o Workday Worktags:

ATTACHMENT(S)

A. Resolution

Santa Maria City CouncilSeptember 15, 2026

Santa Maria City Council
September 15, 2026