FISCAL YEAR 2025-26 MID-YEAR
BUDGET REVIEW REPORT
5B
BUDGET OUTLOOK
• Staff Outlook: Cautious
• Expenditures projected to operate at 1.7% surplus ($9.9M) • Revenues projected to exceed budget by 1.6% ($9.2M)
• General Fund Overall Revenues; 1.2% surplus ($4.2M)
• General Fund Economic Anomaly Reserve in compliance with Fiscal Policy • $68.9M balance; equates to 22.1% reserve ratio
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT Economic Sentiment
2 BUDGET OUTLOOK
• Federal Tariffs; Global Uncertainty (Venezuela/Iran)
• Stock Market valuations & volatility
• Private sectors layoffs
• Jan 2026 highest since Jan 2009; Amazon Go/Grocery closures • Chapter 11 filings for private businesses
• Big Lots; LL Flooring; Express; Container Store
• Nearby cities experiencing budget deficits
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT Economic Sentiment
3 • Self-Insurance Fund: Underfunded by $52.3 million
• Labor Trends: Stabilizing turnover rate
• 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 ● GF-Operating Fund: +$0.3M
● GF-Measure SST: +$0.7M
● GF-Restricted: +$2.0M
● GF-Assigned: +$1.1M
● Airport Fund: +$5.0M
● Sanitation Fund: +$1.2M
● Sewer Fund: +$0.1M
● Transit Fund: -$0.9M
● Water Fund: +$1.3M
● Fleet Fund: -$1.6M
● Self-Insurance Fund: +$0.0M
CITYWIDE
REVENUES
FINANCE DEPARTMENT
FY25-26
Budget Projection
5 ● GF-Operating Fund: +$7.1M
● GF-Measure SST: +$0.6M
● GF-Restricted: +$0.0M
● GF-Assigned: +$0.0M
● Airport Fund: -$4.1M
● Sanitation Fund: +$1.5M
● Sewer Fund: +$0.1M
● Transit Fund: +$2.9M
● Water Fund: +$2.7M
● Fleet Fund: +$0.1M
● Self Insurance Fund: -$1.4M
CITYWIDE
EXPENDITURES
FINANCE DEPARTMENT
FY25-26
Budget Projection
6 ● GF-Operating Fund: -$0.7M
● GF-Measure SST: +$1.3M
● GF-Restricted: -$1.0M
● GF-Assigned: +$0.8M
● Airport Fund: -$5.7M
● Sanitation Fund: +$1.7M
● Sewer Fund: +$1.3M
● Transit Fund: -$6.3M
● Water Fund: +$4.4M
● Fleet Fund: -$0.5M
● Self Insurance Fund: -$1.4M
CITYWIDE
NET RESULTS
FINANCE DEPARTMENT
FY25-26
Surplus/(Deficit)
7 Fund Balance
FY24-25
Audited
FY25-26
Projected Difference
Nonspendable 1,822,932 929,896 (893,036) Restricted 44,224,849 43,219,775 (1,005,074) Cable TV 3,372,213 3,601,296 229,083 Pension Reserve 40,852,636 39,618,479 (1,234,157) Assigned 81,100,002 81,909,136 809,134
Technology Replacement 12,193,794 13,002,928 809,134 Economic Anomaly Reserve 68,906,208 68,906,208 - Unassigned 23,651,863 25,180,897 1,529,034
Other Unassigned 23,651,863 25,180,897 1,529,034 Total Fund Balance 150,799,646$ 151,239,704$ 440,058$
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
Technology
• AI Use in the Workplace
• Enterprise Cashiering Software Implementation – live Dec 2025 • Online Plans Submittal – live Jan 2026
• Online Business License Applications – live Mar 2026
• Citywide Web Redesign – Phase 1 launching 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 OPERATIONAL ENHANCEMENTS
Homelessness Response
• Fourth outreach worker enhances 6-day coverage
• Since 2021: 60 encampments, 1,800 outreached, 108 housed Fiscal Outlook & Revenue Generation
• Community Facilities District Implementation – complete Mar 2026 • Fee Study
• Development Impact Fee Study
• Legislative Advocacy: Pavement Impact Fees, Tort Reform FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 10 OPERATIONAL ENHANCEMENTS
Strategic Staffing Updates
• Program Modification recommended as part of Mid-Year
• Expanded use of external auditors for land leases
• Organizational flexibility; leveraging MAP program
Public Safety
• CA DOJ Implementation
• Award of DOJ Monitor – contract approved Dec 2025
• Program Modifications being implemented
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 11 GENERAL SERVICES- OPERATIONAL ENHANCEMENTS
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT Conversion
• -1.0 FTE Staff Assistant to +1.0 FTE Administrative Analyst (+$31,954) Staffing Level Changes: Net +0.0 FTE
12 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
13 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
14 CAPITAL IMPROVEMENT PLAN SUMMARY
• 100+ assets in this area
• Another 47 playgrounds at 29 of our 33 parks
• Only 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 15 • Columbia Park: World War II
Japanese American Monument
• El Nido Park
• Columbia Park
• Guenser Park
• Parking Structure at RTC
• Wilson Park: Pickleball; Street
Frontage; Paving
• Torrance School Safety & Accessibility
Program (Fern/Seaside)
• Arterial Pavement Improvement Project
• New Signal: Lomita/Madison
• City Hall Landscaping
• Entradero Park Entrance Landscaping
• Southeast Library Landscaping
• Ballast Rock Installation: Phase 2
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT
CAPITAL IMPROVEMENT PLAN SUMMARY
Projection Completions & Updates
Projects in ProgressProjects Completed
16 CAPITAL IMPROVEMENT PLAN SUMMARY
Torrance School Safety & Accessibility Program (Fern/Seaside) FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 17 CAPITAL IMPROVEMENT PLAN SUMMARY
Arterial Pavement Improvement Project
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 18 CAPITAL IMPROVEMENT PLAN SUMMARY
New Signal: Lomita/Madison
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 19 CAPITAL IMPROVEMENT PLAN SUMMARY
City Hall Landscaping
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 20 CAPITAL IMPROVEMENT PLAN SUMMARY
Entradero Park Entrance
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 21 CAPITAL IMPROVEMENT PLAN SUMMARY
Southeast Library Landscaping
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 22 CAPITAL IMPROVEMENT PLAN SUMMARY
Ballast Rock Installation: Phase 2
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 23 CAPITAL IMPROVEMENT PLAN SUMMARY
Ballast Rock Installation: Phase 2
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 24 CAPITAL IMPROVEMENT PLAN SUMMARY
Ballast Rock Installation: Phase 2
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 25 CAPITAL IMPROVEMENT PLAN SUMMARY
Alta Loma Park
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 26 • New fully accessible
playground
• Design in process; construction
to follow
CAPITAL IMPROVEMENT PLAN SUMMARY
Columbia Park
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 27 • 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
• Official name for Camp Wall
Monument approved by Council
3/3/26
CAPITAL IMPROVEMENT PLAN SUMMARY
Paradise Park
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 28 • Comprehensive park overhaul
• Conceptual Design approved by
Council 9/9/25
CAPITAL IMPROVEMENT PLAN SUMMARY
El Nido Park
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 29 • Comprehensive park overhaul
• Partnership with TUSD Funding
Agreement for $10.6M approved
by Council 6/17/25
• CEQA process underway
CAPITAL IMPROVEMENT PLAN SUMMARY
Guenser Park
FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 30 • Rehabilitate park walking path
• Design process underway;
construction to follow
The following are recommendations for the Finance and Governmental Operations Committee:
1. Accept and File Mid-Year Budget Review Report; and
2. Approve Program Modification; and
3. Approve $4.5M appropriation to Airport Fund; and
4. Approve $2.0M appropriation to Self-Insurance Fund; and
5. Recommend City Council approve items 1-4.
RECOMMENDATION
Fiscal Year 2025-26 Mid-Year Budget Report
31 FINANCE DEPARTMENT | FISCAL YEAR 2025- 26 BUDGET REPORT 32