City Council Staff Report Page 1 of 6 November 25, 2025 Staff Report
Agenda Item No. 5.1
DATE: November 25, 2025
TO: Honorable Mayor and Members of the City Council
FROM: Joan Malloy, City Manager
SUBJECT: First Quarter Financial Report For Fiscal Year 2025-2026 (Representing July – September 2025)
EXECUTIVE SUMMARY
Staff recommends that the City Council hear a presentation on the First Quarter Financial Report for Fiscal Year 2025-2026 (representing July – September 2025).
STRATEGIC PLAN ALIGNMENT
This staff report aligns with Goal A: Financial Stability and Sustainability.
BACKGROUND
In the first quarter of the fiscal year, the City’s financial performance focuses on consistent revenue collections and the establishment of expenditure management. Property tax and sales tax receipts, which account for the largest share of General Fund revenues, are not yet recorded. In contrast, business tax and utility users tax revenues grew compared to the prior year. Departmental operating expenditures tracked closely with the budget, with personnel costs accounting for the majority of early outlays. Capital project spending was limited, as most contracts are scheduled for later quarters. At quarter-end, the City’s cash position remained strong, supported by timely revenue inflows and prudent reserve management. While first-quarter results are generally preliminary, they provide an early indication that the City is on track to meet its adopted budget targets for the fiscal year.
DISCUSSION
Table 1 on the following page compares revenue activities between FY 2024-2025 and FY 2025-2026, Quarter 1 (July-September). While there are no activities in some revenue and expenditure categories, it is helpful for Finance to structure this financial report and begin year-end analysis.
Agenda Item No. 5.1
City Council Staff Report Page 2 of 6 November 25, 2025 2 9 Table 1 – General Fund Revenues by Category
Comparing Quarter 1 of FY 2024-2025 and FY 2025-2026
In Quarter 1, the City does not record property tax revenues due to the Alameda County property tax collection and disbursement schedule:
- January 1: Property is assessed as of January 1 each year. - December 10: First installment of secured property taxes is due. - April 10: Second installment of secured property taxes is due. - August 31: Unsecured property taxes (business personal property, boats, etc.) are due.
Disbursements to cities typically occur in cycles following the December and April deadlines. After the first installment deadline in December, cities will receive their first primary transfer of property tax revenue. After the second installment deadline in April, another large transfer of property tax revenue is made to the City. Smaller distributions occur throughout the year as late payments, corrections, or supplemental assessments are processed.
In Quarter 1 of FY26, the City also did not record any sales tax revenues. The California Department of Tax and Fee Administration (CDTFA) distributes revenues to local governments every month, typically based on receipt of sales tax returns and associated payments collected from businesses throughout the state. Disbursements occur with a two-month lag. For example, sales tax revenues for sales reported in January are distributed in March. Based on sales tax analysis, staff is projecting little change in sales tax revenues.
FUND 110 - GENERAL FUND FY 2024-2025 FY 2024-2025 % of FY 2025-2026 FY 2025-2026 % of Revenue by Category Budget Q1 Actuals Budget Cur Bud Q1 Actuals Budget 4A-Prop Tax-Sec & Unsec 17,758,146 - 0.0% 18,745,700 - 0.0% 4B-Prop Tax-Supplementa 483,253 - 0.0% 650,400 - 0.0%
4C-Prop Tax-VLF in Lieu 9,246,627 - 0.0% 9,846,400 - 0.0% 4D-Prop Taxes-Other 3,438,478 - 0.0% 3,597,700 - 0.0%
4E-Sales and Use Taxes 19,817,000 (25,008) -0.1% 18,137,500 - 0.0% 4F-TransntOccupancy Tax 2,088,894 397,341 19.0% 1,637,900 394,117 24.1% 4G-Franchises 6,476,122 666,398 10.3% 6,839,564 10,193 0.1% 4H-Business Lic Taxes 1,944,821 585,215 30.1% 4,800,000 1,680,793 35.0% 4J-Development Fees 80,850 115,965 143.4% 80,850 - 0.0% 4L-Utility Users Taxes 6,469,098 822,665 12.7% 7,246,800 1,141,181 15.7% 4M-Taxes-Other 1,150,000 303,949 26.4% 993,000 165,933 16.7% 4N-Animal Licenses 12,500 2,489 19.9% 10,000 2,630 26.3% 4O-Licenses & Permits 4,926,127 670,053 13.6% 4,727,800 436,393 9.2% 4P-Fines & Forteitures 303,736 69,368 22.8% 415,700 38,814 9.3% 4Q-Service Charges 2,332,356 475,763 20.4% 3,077,400 180,848 5.9% 4R-Federal Revenues 0.0% - 6,041 0.0%
4S-State Revenues 777,000 201,563 25.9% 754,200 251,375 33.3% 4T-County & LocalGovRev 30,000 - 0.0% 0.0%
4U-Investment Income 1,341,200 276,382 20.6% 2,656,800 50,349 1.9% 4V-MiscellaneousRevenue 211,486 279,495 132.2% 1,053,100 88,755 8.4% 4Y-Procd frSaleCapAsset 2,000 - 0.0% 2,000 - 0.0%
4Z-Transfer In 818,000 - 0.0% 18,000 - 0.0%
Revenues by Category 79,707,694 4,841,637 6.1% 85,290,814 4,447,420 5.2% Agenda Item No. 5.1
City Council Staff Report Page 3 of 6 November 25, 2025 2 9 Taxes account for approximately 85% of total General Fund revenues. In Quarter 1, staff focus on annual trends and recent consultant analysis to estimate tax revenue performance for the remainder of the fiscal year. The chart above shows historical growth in General Fund tax revenue.
The chart below shows historical property tax revenues in the General Fund. Property tax accounts for nearly 40% of General Fund revenues, and the City relies on annual growth to keep pace with rising expenses. Along with utility users’ taxes, it is Union City’s most stable revenue source, and any underperformance would create significant budget challenges.
To project and monitor property tax revenues, staff seek a consultant analysis and reconciliation of Union City property tax data. The chart below, provided by HdL Coren & Cone, shows historical revenue by assessed value component.
Property Tax % Change Property Tax in lieu of VLF % Change FY19 Actual 16,268,752 FY19 Actual 6,946,434
FY20 Actual 17,225,697 5.9% FY20 Actual 7,288,199 4.9%
FY21 Actual 17,589,175 2.1% FY21 Actual 7,681,033 5.4%
FY22 Actual 18,224,515 3.6% FY22 Actual 7,894,566 2.8%
FY23 Actual 19,888,365 9.1% FY23 Actual 8,472,448 7.3%
FY24 Actual 21,115,479 6.2% FY24 Actual 9,035,866 6.7%
FY25 Unaudited 21,739,872 3.0% FY25 Unaudited 9,246,627 2.3% FY26 Budget 22,993,800 5.8% FY26 Budget 9,846,400 6.5%
Agenda Item No. 5.1
City Council Staff Report Page 4 of 6 November 25, 2025 2 9 Readers might also be interested in the table below, which presents the median sale price of homes in Union City, and HdL Coren & Cone’s discussion of real estate trends in California.
All cities in California, including Union City, receive 1.0% of the sales tax per state law (the Bradley-Burns Act allocation). Union City also receives 0.5% transactional use tax from the local voter-approved Measure AA of 2010. Unless renewed by voters, this funding will automatically expire on March 31, 2034. Among the various taxes, sales tax is preferred because it captures revenues from consumers beyond city boundaries. The chart below shows the historical sales tax and transactional use tax for Union City.
Agenda Item No. 5.1
City Council Staff Report Page 5 of 6 November 25, 2025 2 9 Based on unaudited FY25 sales tax revenues, FY26 sales tax revenues should be similar.
However, based on consultant analysis, sales taxes are in a declining cycle.
Business tax and utility users’ tax revenues serve as vital funding sources that enable Union City to sustain essential city services. Union City’s utility users’ tax (Measure WW of 2020) is set to expire on December 31, 2028, unless the voters extend it. The UUT generates over $7 million annually, funding essential services such as paramedic and fire protection, 911 emergency response, parks, streets, and youth programs.
Sales Tax - Bradley Burns % Change Sales Tax - Measure AA % Change FY19 Actual 10,878,886 FY19 Actual 5,491,347
FY20 Actual 9,989,135 -8.2% FY20 Actual 5,595,634 1.9%
FY21 Actual 10,851,824 8.6% FY21 Actual 6,249,677 11.7% FY22 Actual 12,010,454 10.7% FY22 Actual 7,148,865 14.4% FY23 Actual 12,456,279 3.7% FY23 Actual 7,174,437 0.4%
FY24 Actual 11,464,078 -8.0% FY24 Actual 6,918,301 -3.6% FY25 Unaudited 11,453,140 -0.1% FY25 Unaudited 6,967,465 0.7% FY26 Budget 11,532,500 0.7% FY26 Budget 6,605,000 -5.2% Business License Tax Utility Users' Tax
FY19 Actual 1,713,983 FY19 Actual -
FY20 Actual 1,851,849 8.0% FY20 Actual -
FY21 Actual 1,739,458 -6.1% FY21 Actual 1,026,166
FY22 Actual 1,787,652 2.8% FY22 Actual 5,285,251 415.0% FY23 Actual 1,897,354 6.1% FY23 Actual 6,295,863 19.1%
FY24 Actual 2,359,247 24.3% FY24 Actual 6,596,476 4.8%
FY25 Unaudited 3,283,776 39.2% FY25 Unaudited 7,938,074 20.3% FY26 Budget 4,800,000 46.2% FY26 Budget 7,246,800 -8.7% Agenda Item No. 5.1
City Council Staff Report Page 5 of 6 November 25, 2025 2 9 Agenda Item No. 5.1
City Council Staff Report Page 6 of 6 November 25, 2025 2 9 Table 2 – General Fund Expenditures by Category
Comparing Quarter 1 of FY 2024-2025 and FY 2025-2026
Table 2 above compares expenditure activities between FY 2024-2025 and FY 2025- 2026, Quarter 1 (July-September). The significant variance in the 5B-Employee Benefits category is due to the timing and recording of the annual CalPERS UAL payment ($8.3 million in FY25 vs $0 in FY26). With the following quarterly report, we will see approximately $9.2 million in UAL expenses posted for FY26.
The variance in the 5D-Services category is primarily due to the timing of the Alameda County Fire contract payment. In Quarter 1, the City paid $2.3 million in FY25 and $3.6 million in FY26. The Fire Operations program has a budget of $14.7 million for FY26.
Attachment 1 (FY26 Q1 Comparison by Program) compares General Fund expenditures by program and department, between FY 2024-2025 and FY 2025-2026.
FISCAL IMPACT
None.
RECOMMENDATION
Staff recommends that the City Council hear a presentation on the First Quarter Financial Report for Fiscal Year 2025-2026 (representing July – September 2025).
Prepared by: Chu Thai, Accounting Manager
Submitted by: Chu Thai, Accounting Manager
Attachments
1. FY26 Q1 Expenditure Comparison by Program
FUND 110 - GENERAL FUND FY 2024-2025 FY 2024-2025 % of FY 2025-2026 FY 2025-2026 % of Expenditure by Category Budget Q1 Actuals Budget Cur Bud Q1 Actuals Budget 5A-Salaries and Wages 27,693,955 6,938,869 25.1% 29,809,318 7,369,817 24.7% 5B-Employee Benefits 16,761,684 10,871,063 64.9% 18,604,026 2,622,052 14.1% 5C-Supplies 680,315 31,071 4.6% 833,382 45,651 5.5%
5D-Services 32,876,319 3,970,493 12.1% 33,076,620 5,053,143 15.3% 5G-PrinPmts on LeaseObl 681,089 149,485 21.9% 702,206 153,531 21.9% 5H-Int Pmts on LeaseObl 77,577 22,632 29.2% 61,414 20,629 33.6% 5I-CapOutlay 595,768 34,692 5.8% 2,157,590 26,285 1.2%
5L-Transfer Out 4,384,867 - 0.0% 2,255,815 2,917 0.1%
Expenditures by Category 83,751,574 22,018,304 26.3% 87,500,372 15,294,026 17.5%