8O
Date: December 16, 2025
To: Honorable Mayor and Members of the City Council
From: Finance and Governmental Operations Committee
By: Ian Dailey, Finance Director | [email protected] Subject: Supplemental Material #1 for Agenda Item 8O
DISCUSSION
On December 11, 2025, the Finance and Governmental Operations Committee met and accepted and filed the Fiscal Year 2025-26 First Quarter Budget Review Report and approved the proposed program modifications and budget adjustments, as recommended, and recommends that City Council take the same action.
ATTACHMENT
1. December 11, 2025 First Quarter Budget Review Report Presentation 1 FISCAL YEAR 2025-26
BUDGET REVIEW REPORT
5A
2 ATTACHMENT 1
BUDGET OUTLOOK
• Staff Outlook: Cautious
• Expenditures projected to operate at 2.2% surplus ($13.2M) • Revenues projected to have 0.4% shortfall ($2.3M)
• Controlling for one-time activity; 0.8% surplus ($4.4M) • General Fund Economic Anomaly Reserve in compliance with Fiscal Policy FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Economic Sentiment
2 3
BUDGET OUTLOOK
• Federal Tariffs
• Stock Market valuations
• Private sectors layoffs
• Amazon; BP; Chevron; ConocoPhillips, Verizon, IBM, Target • Chapter 11 filings for private businesses
• Party City; Joann; Forever 21; Claire’s; Rite Aid; Spirit Airlines • Nearby cities experiencing budget deficits
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Economic Sentiment
3 4
• Self-Insurance Fund: Underfunded by $48.2 million
• Cash Balances by Fund: Complete
• Labor Trends: Stabilizing turnover rate
• Expiring Labor Agreements: Complete
• Aging Infrastructure and City Facilities/Parks: High Capital demand • Pension/OPEB Benefits Liability Management: Pension Obligation KPI
CITYWIDE AREAS OF FOCUS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 4 5
● GF-Operating Fund: -$3.9M
● GF-Measure SST: +$0.1M
● GF-Assigned: +$1.1M
● Airport Fund: +$1.6M
● Sanitation Fund: +$0.5M
● Sewer Fund: +$0.1M
● Transit Fund: -$1.0M
● Water Fund: +$1.3M
● Fleet Fund: -$1.9M
● Self-Insurance Fund: +$0.0M
CITYWIDE
REVENUES
FINANCE DEPARTMENT
FY25-26
Budget Projection
5 6
● GF-Operating Fund: +$4.0M
● GF-Measure SST: +$0.6M
● GF-Assigned: +$0.0M
● Airport Fund: -$1.6M
● Sanitation Fund: +$1.2M
● Sewer Fund: -$0.2M
● Transit Fund: +$3.3M
● Water Fund: +$4.8M
● Fleet Fund: +$0.7M
● Self Insurance Fund: +$0.2M
CITYWIDE
EXPENDITURES
FINANCE DEPARTMENT
FY25-26
Budget Projection
6 7
● GF-Operating Fund: -$8.2M
● GF-Measure SST: +$0.7M
● GF-Restricted: -$3.0M
● Airport Fund: -$2.9M
● Sanitation Fund: +$0.7M
● Sewer Fund: +$0.9M
● Transit Fund: -$5.7M
● Water Fund: +$6.5M
● Fleet Fund: -$0.2M
● Self Insurance Fund: +$0.1M
CITYWIDE
NET RESULTS
FINANCE DEPARTMENT
FY25-26
Surplus/(Deficit)
7 8
Fund Balance
FY24-25
Unaudited
FY25-26
Projected Difference
Nonspendable 1,822,932 929,896 (893,036) Restricted 44,224,849 41,180,805 (3,044,044) Cable TV 3,372,213 3,570,566 198,353 Pension Reserve 40,852,636 37,610,239 (3,242,397) Assigned 81,100,002 81,819,837 719,835
Technology Replacement 12,193,794 12,913,629 719,835 Economic Anomaly Reserve 68,906,208 68,906,208 - Unassigned 25,118,042 18,489,160 (6,628,882) Other Unassigned 25,118,042 18,489,160 (6,628,882) Total Fund Balance 152,265,825$ 142,419,698$ (9,846,127)$
GENERAL FUND
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Fund Balance Updates for General Fund
8 Items of Note
• FY25-26 Adopted Budget
included draw on
Pension Reserve (CEPPT)
• Economic Anomaly
Reserve projected at 22%
in FY25-26
• FY25-26 Adopted Budget
included draw on
unassigned fund balance
for Capital Improvement
Plan
9 Technology
• AI Use in the Workplace
• Enterprise Cashiering Software Implementation – live Dec 2025 • Online Plans Submittal – live Jan 2026
• Online Business License Applications – live Dec 2025/Jan 2026 • Citywide Web Redesign – Phase 1 Feb 2026
• CAD Project in Police – contract awarded Dec 2025
• Enterprise Resource Planning Software – project kickoff Jan 2026
OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 9 10
OPERATIONAL ENHANCEMENTS
Homelessness Response
• Fourth outreach worker enhances 6-day coverage
• Since 2021: 55 encampments, 1,600 outreached, 104 housed Fiscal Outlook & Revenue Generation
• Community Facilities District Implementation
• Fee Study Program Modification
• Development Impact Fee Study Program Modification
• Legislative Advocacy: Pavement Impact Fees
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 10 11
OPERATIONAL ENHANCEMENTS
Strategic Staffing Updates
• Program Modifications recommended as part of First Quarter • Expanded use of external auditors for land leases
• Organizational flexibility; leveraging MAP program
Public Safety
• CA DOJ Implementation
• Award of DOJ Monitor (agendized 12/16/25)
• Program Modifications
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 11 12
CITY ATTORNEY - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Additions
• +1.0 FTE Legal Assistant I
Staffing Level Changes: Net +1.00 FTE
12 13
CITY MANAGER - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Additions
• +1.0 FTE Intern
Conversions
• -1.0 FTE Deputy City Manager to +1.0 FTE Communications Manager • -1.0 FTE Production Assistant I to +1.0 FTE Production Assistant II Staffing Level Changes: Net +1.00 FTE
13 14
COMMUNITY DEVELOPMENT - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Conversion
• -1.0 FTE Planning Associate to +1.0 FTE Senior Planner Staffing Level Changes: Net +0.00 FTE
14 15
Additions
• +0.98 FTE Program Leader
• +1.45 FTE Program Specialist
• +0.50 FTE Senior Program Specialist
• +0.10 FTE Instructor II
Conversions
• -1.0 FTE Program Coordinator and -1.0 FTE Senior Librarian to +1.0 FTE Assistant City Librarian
COMMUNITY SERVICES - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Staffing Level Changes: Net +2.03 FTE
15 16
FINANCE - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Conversion
• -0.5 FTE Deputy Finance Director to +1.0 FTE Administrative Analyst Staffing Level Changes: Net +0.50 FTE
16 17
GENERAL SERVICES - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Conversion
• -1.0 FTE Senior Business Manager and -1.0 FTE Reprographics Specialist and -0.50 FTE Driver/Clerk, Delivery to +1.0 FTE Fleet Services Manager Staffing Level Changes: Net -1.50 FTE
17 18
Additions
• +2.0 FTE Digital Evidence Technician
• +1.0 FTE Public Information Officer
• +2. 0 FTE Performance Auditor
Eliminations
• -1.0 FTE Staff Assistant
POLICE - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Staffing Level Changes: Net +4.0 FTE
18 19
Additions
• +1.0 FTE Sanitation Equipment Operator
• +2.0 FTE Maintenance Worker
Conversions
• -1.0 FTE Equipment Operator to +1.0 FTE Maintenance Worker
PUBLIC WORKS - OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT Staffing Level Changes: Net +3.0 FTE
19 20
REVENUE & NON-WAGE SUMMARY
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 20 Revenue
Non-Wage
Department
General Fund Cost
Impact
Fleet Fund Cost
Impact
Airport Fund Cost
Impact
General Services -$ (194,654)$ 876,600$ Non-Departmental 845,000$ -$ -$ Public Works 32,028$ -$ -$ Revenue Total 877,028$ (194,654)$ 876,600$ 21 FINANCE DEPARTMENT
Highlights
• Over $1B in assets; over 50% depreciated
• Capital Asset Condition indicator
downgraded
• Construction costs in last 4 years
escalated 40+%
CAPITAL
IMPROVEMENT PLAN
FY2025-26 Capital Budget
21 22
FINANCE DEPARTMENT
• Seismic concerns with age of
buildings
• Building Index Study identified
$205M as minimum investment in
next 10 years ($20.5M annually)
• Parks Master Plan to expand upon
the identified need
• Can only afford ~$7.5M annually
• Grants/Debt critical areas of
exploration as part of planning
process to mitigate funding
demand
CAPITAL
IMPROVEMENT PLAN
FY2025-26 Capital Budget
22 23
CAPITAL IMPROVEMENT PLAN SUMMARY
• 100+ assets in this area
• Another 47 playgrounds at 29 of our 33 parks
• 3 of these playgrounds are fully rubberized
• Average age of facilities
• Critical: 1956
• Poor: 1969
• Fair: 1974
Parks & Facilities
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 23 24
• Medians: Hawthorne Blvd, Madrona
Ave
• Paradise Park
• Columbia Park
• Parking Structure at RTC
• Airport Lighting
• Wilson Park: Building 8; Pickleball;
Street Frontage; Paving
• Medians: Hawthorne Blvd, Madrona Ave,
Cabrillo Ave
• City Hall - Building & Safety/IT
• Airport Restroom Renovation
• Hickory/Delthorne Restroom Renovation
• Downtown Arch/Digital Signage
• Bartlett Senior Center
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT
CAPITAL IMPROVEMENT PLAN SUMMARY
Projection Completions & Updates
Projects in ProgressProjects Completed
24 25
CAPITAL IMPROVEMENT PLAN SUMMARY
Madrona Ave Median Project (Carson to Opal)
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 25 26
CAPITAL IMPROVEMENT PLAN SUMMARY
Madrona Ave Median Project (Carson to Opal)
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 26 27
CAPITAL IMPROVEMENT PLAN SUMMARY
Cabrillo Ave Median Project
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 27 28
CAPITAL IMPROVEMENT PLAN SUMMARY
Cabrillo Ave Median Project
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 28 29
CAPITAL IMPROVEMENT PLAN SUMMARY
Cabrillo Ave Median Project
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 29 30
CAPITAL IMPROVEMENT PLAN SUMMARY
Cabrillo Ave Median Project
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 30 31
CAPITAL IMPROVEMENT PLAN SUMMARY
Hawthorne Blvd Median Project (Del Amo to Halison)
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 31 32
CAPITAL IMPROVEMENT PLAN SUMMARY
Hawthorne Blvd Median Project (Del Amo to Halison)
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 32 33
CAPITAL IMPROVEMENT PLAN SUMMARY
City Hall Renovation – Building & Safety
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 33 34
CAPITAL IMPROVEMENT PLAN SUMMARY
City Hall Renovation – Building & Safety
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 34 35
CAPITAL IMPROVEMENT PLAN SUMMARY
City Hall Renovation – Information Technology
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 35 36
CAPITAL IMPROVEMENT PLAN SUMMARY
Delthorne Park Roof Replacement
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 36 37
CAPITAL IMPROVEMENT PLAN SUMMARY
Airport Restroom Renovation
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 37 38
CAPITAL IMPROVEMENT PLAN SUMMARY
Hickory Park Restroom Renovation
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 38 39
CAPITAL IMPROVEMENT PLAN SUMMARY
Downtown Signage
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 39 40
CAPITAL IMPROVEMENT PLAN SUMMARY
Digital Signage
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 40 41
CAPITAL IMPROVEMENT PLAN SUMMARY
Columbia Park
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 41 • Three-phase project
• Schematic Design for World War II
Camp Wall Monument approved by
Council 4/22/25
• Conceptual Design & Community
Engagement approved by Council
8/19/25
42 CAPITAL IMPROVEMENT PLAN SUMMARY
Paradise Park
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 42 • Comprehensive park overhaul
• Conceptual Design approved by
Council 9/9/25
43 CAPITAL IMPROVEMENT PLAN SUMMARY
El Nido Park
FINANCE DEPARTMENT | FISCAL YEAR 2025 - 26 BUDGET REPORT 43 • Comprehensive park overhaul
• Partnership with TUSD Funding
Agreement for $10.6M approved by
Council 6/17/25
• CEQA Procurement underway
44 44
45