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HomeMy WebLinkAboutFiscal Year 2025/26 Mid-Year Budget Adjustments & 2nd Quarte i oNiINGTp 2000 Main Street, of , �� Huntington Beach,CA City of Huntington Beach APPROVED$6-0-1 9y Qior (BURNS-ABSENT) -eDUNTY tt'.': . File #: 26-147 MEETING DATE: 3/3/2026 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Travis Hopkins, City Manager PREPARED BY: Zack Zithisakthanakul, Acting Chief Financial Officer Subject: Fiscal Year 2025/26 Mid-Year Budget Adjustments & 2' Quarter Forecast Statement of Issue: The Finance Department has prepared a mid-year budget review for the fiscal year that began on July 1, 2025. In interfacing with operating departments, budgetary requests have been assessed across all City departments, and certain adjustments are being recommended based on available resources in respective funds. The proposed adjustments of$1 ,470,993 across multiple funds address operational needs, infrastructure requirements, and grant-supported programs while maintaining fiscal stability and uninterrupted service delivery. Financial Impact: Fiscal Year 2025/26 Mid-Year Adjustments Approval of the proposed mid-year adjustments will appropriate a total of$1,470,993 across multiple funds. The Infrastructure Fund adjustments totaling $530,000 will be funded through available Infrastructure Fund fund balance. These requests address needs that were not originally programmed as part of the adopted Fiscal Year 2025/26 Budget. These requests are one-time in nature and do not create ongoing structural commitments beyond the current fiscal year. The $499,000 in Grant Fund appropriations are fully supported by external grant revenues and therefore do not impact City fund balance. The $441 ,993 in Special Revenue Fund adjustments are funded by restricted revenues designated for their intended purposes. Recommended Action: Approve mid-year budget adjustments to the Fiscal Year 2025/26 Revised Budget in the funds and by the amounts contained in Attachment 1. Alternative Action(s): Do not approve the recommended action(s) and direct staff accordingly. City of Huntington Beach Page 1 of 2 Printed on 2/25/2026 powered by LegistarT" 133 File #: 26-147 MEETING DATE: 3/3/2026 Analysis: The purpose of this item is to present the City's mid-year budget request and provide an updated financial outlook based on second quarter actual performance. Mid-year adjustments are a routine part of municipal budgeting and allow the City to address operational needs and infrastructure priorities that arise after adoption of the annual budget. The total mid-year adjustments requested for Fiscal Year 2025/26 amount to $1 ,470,993. Of this amount, $530,000 is attributed to the Infrastructure Fund, $499,000 to grant funds, and $441,993 to various special revenue funds. No General Fund appropriation increase is requested as part of this action. The Infrastructure Fund requests total $530,000 and address infrastructure-related needs identified during the current fiscal year. These items are necessary to preserve City facilities and public assets and to prevent further deterioration or cost escalation. While these needs were not originally programmed in the adopted budget, they are operationally necessary to maintain safe and functional public facilities and infrastructure systems. The Grant Fund request of$499,000 reflects program expenditures associated with externally funded initiatives. These funds allow the City to implement specific programs and services in accordance with grant requirements and timelines. Acceptance and appropriation of these funds ensures compliance with grant conditions and allows the City to maximize available external resources. The Special Revenue Fund adjustments totaling $441,993 relate to program-specific activities supported by restricted funding sources. These appropriations enable departments to carry out legally or programmatically restricted activities consistent with the purpose of each respective fund. In conjunction with these requests, staff has prepared the Fiscal Year 2025/26 Second Quarter General Fund forecast. The forecast incorporates year-to-date financial performance and updated projections for the remainder of the fiscal year. Revenues are performing favorably relative to initial assumptions, and expenditures continue to be managed carefully across departments. The updated forecast demonstrates that the City remains in a stable financial position while addressing the needs presented in this mid-year adjustment. Environmental Status: Not applicable Strategic Plan Goal: Non Applicable - Administrative Item Attachment(s): 1. Fiscal Year 2025/26 Recommended Mid-Year Adjustments 2. Fiscal Year 2025/26 Mid-Year Budget Adjustments Presentation City of Huntington Beach Page 2 of 2 Printed on 2/25/2026 powered by LegistarT" 134 Fiscal Year 2025/26 Mid-Year Adjustments Infrastructure Service Fund Community&Library Services Newland House Museum Renovation 390,000 Community&Library Services Total 390,000 Public Works Professional Contracting Services for Construction Inspection 140,000 Public Works Total 140,000 Infrastructure Service Fund Total 530,000 Grant Fund Community Development California Coastal Commission Local Coastal Program Planning Grant 499,000 Community Development Total 499,000 Grant Fund Total 499,000 Special Revenue Funds Police Air Support Maintenance and Equipment Upgrades 160,000 Narcotics Forfeiture 150,000 Police Total 310,000 City Manager HBTV3 Control Room Broadcast Infrastructure Refresh 81,993 City Manager Total 81,993 Community&Library Services Arevalos Park Playground Grounding 50,000 Community&Library Services Total 50,000 Special Revenue Funds Total 441,993 All Funds Fiscal Year 2025/26 Mid-Year Adjustments Total 1,470,993 135 61\.=71‘- '‘‘ c •• ,RPORA •. F Y 2025/26 Mid -Year • Budget Adjustment ____ _.� _ ,,, % c--) . A�_�_ , : Requests & 2nd - • - -----s � _ � - _ -_- : Quarter Forecast ;10caleil 1 - - . 0 ._ • '�� il • - c _ _ .it 4:k%4, 7 % 4c8 17, i g 09 , ,,.• a •ss• \ ‘.4 1: UIVTN Cilivif 03/03/2026 'r►.►s►ordel 136 Purpose of Today's Presentation • Share mid-year budget adjustment Ader///�.►,,r, requests �// ► OT1NG7 ._. vip, Iii, • Explain why they are needed .. ... • _ ::40. % I% N _ --- --.,.. -- tPv" tir • Show how they are paid for _. -. - — - g li l•. i. O v X/„/ ^.($may • Review the Second Quarter forecast 'i:•'.. ' ein �� .190. :*.` Q:' 0 �.. '' • •II••.:....•.e \' -..AUNTY C' ,," • Confirm the City can afford the requests -■►..,,,,,,,,,r,/l and maintain services 137 What Is a Mid-Year Budget Adjustment P LI:,---i ± ,. w [- ,-- ,_ Updates the Addresses urgent Covers items not Uses available Helps maintain budget during the or unexpected known at budget funding sources service fiscal year needs adoption continuity 138 FY 2025-26 Mid-Year Requests Overview A 14:::\Airs\I I N Ari 6 7 671‘114 I I h" 4., v ...„,obselmeees. 4/ milk • Supports safety, services and r ,,, .... „,„,0„,,, ...... , lit infrastructure .• \\A ca $ A .... ...., ie ___ No • items are one-time expenses • • ---............_____..... _ - ..... 0 • Funded by fund balance or 41 ' • .„ - _---, • & -----... _ - --- CI %k grants 11 C...) : LI • — - - . .._...., • • :-- _... .__L---„,-;,--------- • 14 a Helps avoid service reduction N • — • Total Requests: $1.47M Ilk C3 fib ;;i0-7 >r:--4,---?•,--- - -IL--- — , • 4' 1 .. ) .l . . • - - . - 1 , :- i ,-- )0,1 • $0.53M Infrastructure Ilikk 17 o Iv-—0- ...-- - :_,,:,... , op • $0.50M Grants •°. c§k** 0$ lilho cpz. No/ /7 19n , .46' kv • <, • $0.44M Special Revenue _.• , mak c- r) esseeses•ips ‘114161 C °UNIN? t\ ir ill ir 41110:4PAPPAgrAlrow 139 Infrastructure Fund Requests - $530,000 Infrastructure Fund Fund/Department Amount Funding Source Justification Funding for Newland House Museum renovations addressing hazardous Community & Library Fund balance reserves from materials and preservation issues Services $390,000 fund 314. identified during inspection. Supports inspection services to Fund balance reserves from maintain facilities and permit-backed Public Works 140,000 fund 314. projects. Infrastructure Fund Total $530,000 ... .,., L) � oj ... r c NTY 140 Grant Fund Request - $499,000 Grant Fund Fund/Department Amount Funding Source Justification Appropriations are needed for the California Coastal Commission Local Completely offset with Coastal Program Planning Grant, Community Development $499,000 additional grant funding. approved on resolution 2023-20. Grant Fund Total $499,000 „ IN Ake % - _sue y^l coLINTY t,,"## 141 Special Revenue Funds Requests - $441 ,993 Special Revenue Funds Fund/Department Amount Funding Source Justification Supports turbine wheels, spotlight replacement, inspections, investigative software, and overtime, Fund balance reserves supporting airship readiness, from funds 212, 214 & crew safety, and narcotics Police $310,000 242. enforcement. Additional funding is needed to replace aging and failing audio- visual infrastructure that has Fund balance reserves begun disrupting publicly City Manager 81,993 from fund 243. noticed meetings. Funds are needed to ground �� �,U.. Np4 playground equipment because 'It �`.•• �pRPORArFo•..•1���\ Community & Library Fund balance reserves of overhead Edison electrical � ? Vsr-> Services 50,000 from fund 226. lines. Special Revenue Funds t � � ��.s� � may,, p Total $441,993 `�9���'•.Fy aa•`••O`� 142 FY 202,5/2,6 Second Quarter General Fund Forecast Overview • Based on year-to-date results 41" vilw • Includes full-year projections g// � t N Gi r 00 , ,,<c.„0.7,4.7olp OR.,46.76.76,Ner. <53:4\vt • Revenues tracking above budget • ` . — :-. :- •••• Ps ' \ i • Spending closely managed •, -� ."1f , (� 11k 1;1"•••t.,4-,9— ------- ,t:SN).0•1 .4c ' 0 '•41•.i....•••• l4 • Shows sufficient funds to cover costs ��, d(/N T`( c 1# '�,,, ,r►/►/�/ 143 General Fund Revenues Description FY 2025/26 FY 2025/26 FY 2025/26 Revised to Revised to Adopted Revised Forecast Forecast Forecast Budget Budget Variance Variance , . 0%v a 216,512,986 216,512,986 216,042,424 (470,562) -0.22% Revenue from Other Agencies and Charges for Services 37,917,297 38,242,508 41,399,885 3,157,377 8.26% Fines & Forfeitures and Use of Money & Property 28,987,545 28,990,745 30,140,722 1,149,977 3.97% License & Permits 9,974,645 10,135,317 10,511,744 376,427 3.71% __ Other Revenue and Non- 1i/fy`ANT I N&70 I \` .M...• V Operating Revenue 6,709,395 6,709,395 10,025,662 3,316,267 49.43% Of ' ..,..-��gRPORq~e'•6�i n�,Nk Grand Total 300,101,868 300,590,951 308,120,437 7,529,486 2.50% "i ,'-- T��- _ s = sr°U N T l °\\', 144 General Fund Expenses Description FY 2025/26 FY 2025/26 FY 2025/26 Revised to Revised to Adopted Revised Forecast Forecast Forecast Budget Budget Variance Variance Personnel 202,886,962 203,680,462 198,862,229 (4,818,233) 2.37% Operating 54,517,629 64,394,978 67,114,119 2,719,141 4.22% Non-Operating Expenses 42,111,081 42,111,081 42,092,200 (18,881) -0.04% Grand Total 299,515,672 310,186,521 308,068,548 (2,117,973) -0.68% #d, TING7 S � 145 KeyTakeaways 4,,,,„......, f'f T [ N G • Requests support safety, services, and I . •••�RPOR•'•• . �, infrastructure Nik i �--_- .-- ., �` •w �. �.,17 c • � ! .sir • Adjustments are one-time costs =� - • II k c.," ,,,-_-,--__„..- _-- _ - ..-_-__ — i ,,, i , .,::= •.........46, ,.: _,:ifk:: :,...., , -57 .. .,- „ • Funded with existing funds and grants �� . .�'•.,�' =- .•;.• �► �•��' 17, 1909� P•' ``'(� 0 ", •••..••.•••• 1 1 • Citycan afford these requests �(,u'"v i t'' r' • Services will continue without r 7y disruption 146 Questions ? xt 1 •" ,. 1 r ti 1 -'#. 147 �� T ING ie4,r---, FY 2025/26 Mid -Year c, •• Nip RPORAJE� ‘ • -___ - - �',,,,,,,m,„ , ,�`"-�`� Budget Adjustment __ - . - ' ,.(it __ _ _ _-- _ _ _ _ ______, _ _ _ __ _ _ _ _ •• _ s Requests & 2nd _ _ ____ _ _.__ ____ 0 N t Quarter Forecast ...,p_,..-.- , ), • ...,:.: - _ _, ,_ ,...,„ , • . _ __ _ _____ _ -__••• 6...„-- $ • - - , O. Ceb N 4). ••• C'S - 0 e ..6%. e ' 1 9 •• •• 1�� N t ,##UTY \i � 03/03/2026 Purpose of Today's Presentation • Share mid-year budget adjustment requests /������� NTIN � �= A �i �v TO Q •••••\NO0 N3 0 RA TF�•.... Vlk • Explain why they are needed _ _ _ _ ____ iI .• • Show how they are paid for __ ==~ • s, . • Review the Second Quarter forecast ���i ••., Fe^ Sao •� v • /7, 190gLeo*.• `� !� =� • •••••••.•••• `` > / �0OU c, ,/ • �_ NTY ,i Confirm the City can afford the requests �,��4.�/ and maintain services What Is a Mid-Year Budget Adjustment .... A h L PI En rEC:1;1 Updates the Addresses urgent Covers items not Uses available Helps maintain budget during the or unexpected known at budget funding sources service fiscal year needs adoption continuity FY 2025-26 Mid-Year /our— '��••. Requests Overview Ø/ 1 N • Supports safety, services and RP pRq T...seseege 7:0:4.6.1vtik •• ' Y FAo ilitik infrastructure �.'F-•'. ip D• '�s• • - •• • Items are one-time expenses ; --- - -- - - - - - - • Ilk • • Funded by fund balance or v ---. d ,� ;„/„T,,. i C I rants i —_- - o S - -_ _ • • • Helps avoid service reduction 1 ; —_ _ _`• Total Requests: $1 .47M • _ - - ,--i,__\_-- _'1\1 c\d,i )C'‘4 t64.6 _._6__ • • $0.53M Infrastructure \ ••. - ____-=_=___ :• • $0.50M Grants 16 %-. cxa- - -- \0 .4, es7 ••. /7, 1909:••* • $0.44M Special Revenue F �••...•• I 0UNTN � ri .rftror// Infrastructure Fund Requests - $530,000 Infrastructure Fund Fund/Department Amount Funding Source Justification Funding for Newland House Museum renovations addressing hazardous Community & Library Fund balance reserves from materials and preservation issues Services $390,000 fund 314. identified during inspection. Supports inspection services to Fund balance reserves from maintain facilities and permit-backed Public Works 140,000 fund 314. projects. Infrastructure Fund Total $530,000 �i/��NT I NGTO _ ......., .•• COUNTY 0P"ill Grant Fund Request - $499,000 Grant Fund Fund/Department Amount Funding Source Justification Appropriations are needed for the California Coastal Commission Local Completely offset with Coastal Program Planning Grant, Community Development $499,000 additional grant funding. approved on resolution 2023-20. Grant Fund Total $499,000 �A" iioNT I NGTp�L or O( ••�pRPORA)E'• 1,144, 11 �. s• ai' r s = 1 jOUNTY C,,i#I Special Revenue Funds Requests - $441993 Special Revenue Funds Fund/Department Amount Funding Source Justification Supports turbine wheels, spotlight replacement, inspections, investigative software, and overtime, Fund balance reserves supporting airship readiness, from funds 212, 214 & crew safety, and narcotics Police $310,000 242. enforcement. Additional funding is needed to replace aging and failing audio- visual infrastructure that has Fund balance reserves begun disrupting publicly City Manager 81,993 from fund 243. noticed meetings. ����NT I NG Funds are needed to ground ,_,,.....,104,n 'o N _'.. ORP0RAT. '• CT \ playground equipment because _. _ _ Community & Library Fund balance reserves of overhead Edison electrical � ;;' .'9�\� c�: �i '�. x \ Services 50,000 from fund 226. lines. _ Special Revenue Funds �\�' ....aar=� ' ¢1� Total $441,993 17, falko,F����0 C ', COUNTY ‘�ii1 FY 2025/26 Second Quarter General Fund Forecast Overview • Based on year-to-date results • Includes full-year projections �� vNT I N G 04 A/ •.•• �pRPORg •..• 6) O .• \N rep .• <(‘ • Revenues tracking above budget (� = 414411/hi:.:7c) ‘ 1C31 % • Spending closely managed 's '?' '' %!�'- � AFC ••...•.....• � 10 • Shows sufficient funds to cover costs _ OUNT 410%1P:490// General Fund Revenues Description FY 202.5/26 FY 2025/26 FY 2025/26 Revised to Revised to Adopted Revised Forecast Forecast Forecast Budget Budget Variance '%► Variance Taxes 216,512,986 216,512,986 216,042,424 (470,562) -0.22% Revenue from Other Agencies and Charges for Services 37,917,297 38,242,508 41,399,885 3,157,377 8.26% Fines & Forfeitures and Use of Money & Property 28,987,545 28,990,745 30,140,722 1,149,977 3.97% License & Permits 9,974,645 10,135,317 10,511,744 376,427 3.71% Other Revenue and Non- I/�AN..........GT Operating Revenue 6,709,395 6,709,395 10,025,662 3,316,267 49.43% ,I° p��•••',N °'"RgTEo.,,�� n��\ . CT Grand Total _,•'�\\ 300,101,868 300,590,951 308,120,437 7,529,486 2.50% " - �<k: 1 OUN1. ��iri� General Fund Expenses Description FY 2025/26 FY 2025/26 FY 2025/26 Revised to Revised to Adopted Revised Forecast Forecast Forecast Budget Budget Variance Variance Personnel 202,886,962 203,680,462 198,862,229 (4,818,233) -2.37% Operating 54,517,629 64,394,978 67,114,119 2,719,141 4.22% Non-Operating Expenses 42,111,081 42,111,081 42,092,200 (18,881) -0.04% Grand Total 299,515,672 310,186,521 308,068,548 (2,117,973) -0.68% 0 _ ``,` ••�..........•• 4/' ,'I O� •.•\N,pftPORA7Fe•e.• �F . • � Q \Tom•• -_ --- e• 0��\�0 0t' .0OUNT`It'I' 111, Key Takeaways °/ N1 I N G 7-7.4% • Requests support safety, services, and ( I <4ep••RP ORA••••• ee •• infrastructure • •,t<` \\ - -- 'sue \ • Adjustments are one-time costs ; -_== ; % • Funded with existing funds and grants \� 2 '••,.cFe- = 0 � C • City can afford these requests 'taw..1`UNTY //� �ii�// • Services will continue without disruption Questions? • 00. flu 1; Y(��" i.. {i • w L..