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CC - Item 5A - Fiscal Year 2025-26 Mid-Year Budget ReviewROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: BEN KIM, CITY MANAGER `Y DATE: APRIL 14, 2026 SUBJECT: FISCAL YEAR 2025-26 MID -YEAR BUDGET REVIEW BACKGROUND On June 10, 2025, the City Council adopted the 2025-26 Operating and Capital Improvement Program Budgets. This report summarizes the City's General Fund overall financial position for the current fiscal year through December 2025 including a discussion on revenue sources and expenditure trends. The estimates stated within are just that, estimates, and are subject to change as the current fiscal year continues. SUMMARY The adopted General Fund budget includes appropriations of $32.2 million against revenue estimates of $32.2 million. As shown in the following chart (Table 1), FY 2025-26 operating revenue budget was estimated at $0.6 million more than the prior year (FY 2024-25) adjusted budgeted estimate. Fiscal year 2025-26 operating expense appropriations are $0.4 million more than the prior year budget. Based on year-end estimates staff anticipates revenue will exceed original estimates by nearly $1.11 million while operating expenditures will fall $0.16 million below budgeted levels. The estimated year-end surplus amounts to $1.27 million. TABLE 1 FY2024-25 Rec'd FY2025-26 Rec'd SUMMARY FY2024-25 YTDActivity Thru FY2024-25 FY2025-26 YTD Activity Thru Year End Total Budget Through Dec DEC Actuals Total Budget Through Dec DEC Estimate Revenue 31,123,100 8,091,341 26% 33,198,221 Transfer In 480,414 - 0% 480,414 Approp/Exp 30,743,700 13,879,241 45% 30,266,459 Transfer Out 850,000 - 0% 850,000 Capital Impr 214,915 - - Net Rev (Exp) (205,101) (5,787,900) 2,562,176 32,188,700 8,734,854 27% 33,298,302 - - 0% 32,123,280 14,586,619 45% 31,965208 60,000 - 0% 60,000 5,420 (5,851,765) 1,273,094 AGENDA ITEM 5.A City Council Meeting — FY 2025-26 Mid -Year Budget Review April 14, 2026 Page 2 of 7 DISCUSSION REVENUE As adopted, the City's FY 2025-26 revenue budget reflects $32.2 million in anticipated operating revenue. Year-end estimates reflect $33.3 million in operating revenue, which is $1.1 million more than the budgeted revenue. The estimates are based on current receipts through December 31 st, comparison to the same period in the prior year, revenue received after the mid -point, and anticipated revenue based on actual to mid -year receipts for the prior year and known events. The following narrative and projections, while accurate to the best of staffs present understanding, must be viewed as subject to reconsideration as second half receipts become known. As shown in Table 2, General Fund revenue received as of December 2025 is only 27% of the estimated revenue for FY 2025-26 at 50% of the year. This is typical due to revenue sources that are received in July and August that are accrued back to the prior fiscal year and other large revenue sources that are received on a quarterly, bi-annual, or annual basis. As reflected in Table 2, overall General Fund revenues are trending higher than the same reporting period (December) in FY 2025- 26 for most categories with actual receipts $644 thousand more than the same period in the prior year. TABLE 2 FY2024-25 Rec'd FY2025-26 Revenue by Category FY2024-25 YTDActivity Thor Year End FY2025-26 YrD Activity %Rec'dTbru YearFnd Total Budget Through Dec DEC Actuals Total Budget Through Dec DEC Estimate Taxes 24,047,800 4,671,079 19% 24,274,274 24,531,900 4,665,768 19% 24,757,192 Intergovernmental 372,500 265,033 71% 490,304 379,600 349,709 92% 443,650 Licenses and Permits 3,293,800 1,875,650 57% 4,032,196 3,323,500 2,418,610 73% 3,979,348 Fines and Forfeitures 648,900 283,663 440% 630,021 651,800 367,310 56% 667,682 Use of Money and Property 1,200,000 321,464 27°/u 1,884,888 1,550,000 270,954 17% 1,618,202 Charges for Services 1,153,500 573,116 50% 1,403,421 1,284,000 567,835 44% 1,363,566 Other Revenue 406,600 101336 25% 483117 467,900 94,668 20% 468,662 Total - Gen'1 Fund Operating Rev 31,123,100 8,091,341 26% 33,198,221 32,188,700 8,734,854 27% 33,298,302 Transfers In 480414 - 00/6 480414 - - Grand Total - General Fund Sources 31,603,514 8,091,341 26% 33,678,635 32,188,700 8,734,854 27% 33,298,302 Tax revenue, as budgeted, represents 76% of all General Fund operating revenue followed by 10% in the Licenses and Permits category. Since taxes are the most significant component of the City's revenue structure, this report focuses mostly on that category as presented below with summary information for major tax categories. Overall, taxes are budgeted at $24.5 million, and (based on preliminary information) are projected to end the fiscal year at $24.7 million, an increase of $0.2 million. License and Permits category are budgeted at $3.3 million, and (based on preliminary information) are projected to end the fiscal year at $4.0 million, an increase of nearly $0.7 million. City Council Meeting — FY 2025-26 Mid -Year Budget Review April 14, 2026 Page 3 of 7 TABLE 3 FY 2024-25 FY 2025-26 Major Taxes YTD % YTD FY 2024-25 Activity Rec'd FY 2025-26 Activity % Rec'd Total Through Thru Year End Total Through Thru Year End Tax Name Budget Dec DEC Actuals Budget Dec DEC Estimate Property Taxes 4,025,400 1,499,924 37% 4,241,772 4,167,500 1,513,366 36% 4,266,803 Property Tax In LieuNLF 8,506,900 - 0% 8,620,915 8,804,600 - 0% 9,073,000 Sales and Use Tax 7,333,200 2,217,375 30% 7,106,216 7,198,500 2,257,104 31% 7,170,500 Transient Occupancy Tax 2,361,000 605,046 26% 2,320,163 2,361,000 559,225 24% 2,274,342 Propelly Taxes — Based on projections by the City's property tax consultant, HdL Companies, and a review of other components such as prior year payments, late fees, transfer taxes, and residual RPTTF (Redevelopment Property Tax Trust Fund — Successor Agency) revenue, staff estimates property taxes will complete the year at $4.27 million, above budget by an estimated amount $100 thousand. The secured and unsecured estimate is provided by HdL, however, estimates for the other components are prepared by staff based on trends. Transfer tax revenue and RPTTF are trending at prior year receipts. The RPTTF is calculated by the County based on property taxes collected within the Successor Agency areas less required payments for continuing obligations, ROPS and passthrough agreements. The amount remaining after paying obligations is then distributed to taxing agencies including a portion to the City of Rosemead. Property Tax In -lieu — The VLF is paid annually by the vehicle owner in lieu of property taxes and is based on the vehicle's sale price. The fee for vehicles brought into California from out of state is based on the value of the vehicle at the time of initial registration in California. Based on growth in assessed value, this revenue is remitted to the City in two equal payments in the third and fourth quarter of the year. The first payment was received in January and indicates the year-end receipt will be $9.1 million, $268 thousand over the budgeted estimate and $452 thousand more than the amount received in FY 2024-25. Sales Tax — Based on projections by the City's sales tax consultant, HdL Companies, the year-end estimate is $7.17 million which is an increase of $64 thousand more than the amount received in FY 2024-25. The dollar increase when compared to last year actuals is related to the overall growth in the economy. Transient Occupancy Tax (TOT) — Receipts from TOT have been significantly impacted by the pandemic. Revenue received in both FY 2017-18 and FY 2018-19 topped $2.3 million and was budgeted to receive $2.4 million in FY 2019-20. Due to the pandemic, receipts for FY 2019-20 fell to $1.78 million and final receipts for FY 2020-21 fell further, to just $1.4 million. While the pandemic lingered in FY 2021-22, revenue started to rebound and $2.1 million was collected. For FY 2022-23, $2.3 million in TOT revenues were received. For FY 2023-24, $2.2 million in TOT revenues were received. For FY 2024-25, $2.3 million in TOT revenues were received. It is anticipated that $2.3 million will also be collection in TOT revenues this fiscal year. City Council Meeting — FY 2025-26 Mid -Year Budget Review April 14, 2026 Page 4 of 7 Franchise Fees — The largest contributors to this category (Republic Services, SCE, and So Cal Gas) are received in the second half of the fiscal year. The year-end estimate of $1.89 million is based on the FY 2024-25 year-end actuals and current receipts. Business License Fees — Based on current receipts collected through December 31, 2025, staff is anticipating revenue in the amount of $96 thousand. The Licenses and Permits category includes Building Permits, Plan Checking, Industrial Waste Permits, Public Works Permits, and Animal Licenses. The largest source in this category is Building Permits/Plan Checking, which is budgeted at $2.7 million. Based on current receipts of $2.2 million, staff estimates revenue for Building Permit/Plan Checking could reach $3.5 million by year-end. The category as a whole, is estimated to complete the year $656 thousand over the budgeted estimate. Fines and Forfeitures are estimated to complete the year at $668 thousand which is $38 thousand more than prior year ending actuals. Use of Money and Property which consists of Interest Earnings, Rents and Royalties, and Facilities Rentals is estimated at $1.62 million, up from the budgeted $1.55 million based largely on an increase to actual and anticipated interest earnings from investments. As of January 31 St, 2025 interest earnings amounted to $544 thousand, and anticipated interest earnings for the fiscal year for the General Fund amounts to $1.43 million. The projected interest earnings of $1.43 million represent a $270 thousand decrease over earnings of $1.7 million for fiscal year 2024-25. Charges for Services is the category that remains most impacted by the pandemic but has seen a strong recovery. Parks and Recreation revenue is budgeted at $1 million and at mid -year point has already received $433 thousand or 43% of budget. Staff estimates that by year-end, revenue will meet the budgeted amount of $1 million. Overall, the category of `Charges of Services' which includes City Clerk, Community Development, Public Works, and Parks and Recreation, is estimated to end the year at $1.36 million. Other Revenue is a catch-all category for miscellaneous type revenue with a budget estimate of $468 thousand. The largest sources within this category is the crossing guard reimbursement budgeted at $166 thousand, and the reimbursement from other agencies (HCD and SA) at $260 thousand. The crossing guard reimbursement is for 50% of the City's cost of the crossing guard contract service. The reimbursement from other agencies is an internal accounting process for the payment of services provided to the HDC and SA each year. Overall, the category is estimated to complete the right around the budgeted estimate. City Council Meeting — FY 2025-26 Mid -Year Budget Review April 14, 2026 Page 5 of 7 APPROPRIATIONS / EXPENDITURES At six months into the Fiscal Year (December 31, 2025), overall General Fund appropriations are only 46% expended as shown in Tables 4 and 5. As shown in Table 4, all actual expenditures as of December 31 St by category are within an acceptable range of year-to-date expenditures in relation to the total appropriation for the year. TABLE 4 FY2024-25 FY2025-26 YI'D % YTD Fxpenses by Category Activity Rec'd Activity FY2024-25 Through Thru YearFnd FY2025-26 Through %Rec'd Year End Total Budget Dec Dec Actuals Total Budget Dec Thru DEC Estimate Salary and Benefits 10,974,800 5,240,045 48% 10,978,083 11,289,000 5,523,581 49% 11,289,000 Operations 7,018,750 3,726,329 53% 7,092,061 7,056,780 3,654,514 52% 7,047,863 Contract Police Svcs 10,901,000 4,355,403 41% 10,608,033 11,366,700 4,591,504 40% 11,253,033 Util/ Ins / Allocations/ Other 2,141,850 557,464 260% 1,588,281 2,410,800 817,020 34% 2,375,312 Capital Assets/Projects 214,915 - 0% - 60,000 - - 60,000 Transfers Out 850,000 - 0% 850,000 - - - - 32,101,315 13,879,241 43% 31,116,458 32,183,280 14,586,619 45% 32,025,208 • Salary and Benefits — These costs are 49% expended at 50% of the year due to vacancies and budgeted step increases due later in the fiscal year. It is anticipated that expenditure in this category will remain within the budgeted amount by year end. • Operations — Expenditures in the `Operations' category are slightly above the 50% level. The current fiscal year has slightly higher contract services fees relating to the Building Division when compared to last fiscal year. • Contract Police Services — The year-to-date total for Contract Police Services represents 5 months of billings at December 30, 2025, and on target to meet the budgeted amount. • Utilities / Insurance / and Allocation — The actuals for this category in the current fiscal year is 34% when compared to budget. Staff is anticipating increases in utility costs (gas, water, etc.). City Council Meeting — FY 2025-26 Mid -Year Budget Review April 14, 2026 Page 6 of 7 As shown in Table 5, the majority of departments also spent less than 50% for the 6 month period. It is expected that the majority of departments will operate at or below their allocated budgets by the end of the year, and that the final expenditures for the general fund will be slightly lower than the budgeted amount. Table 5 Budget& Expenditures by Department FY 2024-25 Total Budget FY 2024-25 YTD Activity Through Dec %Exp'd Thru Dec Year End Estimate FY 2025-26 Total Budget FY 2025-26 YTD Activity Through Dec %Exp'd Thru Dec Year End Estimate City Council/Commissions 559,900 241,440 43% 514,600 612,100 275,732 45% 723,600 City Attorney 349,600 193,415 55% 334,800 349,600 94,235 27% 314,640 City Clerk 1,243,600 843,872 68% 1,091,500 1,259,200 885,450 70% 1,259,200 Administration 1,692,400 834,255 49% 1,541,000 1,664,400 808,220 49% 1,664,400 Finance 1,066,600 548,833 51% 1,026,600 1,026,000 495,544 48% 1,026,000 General Services 1,120,300 601,702 54% 1,099,500 1,046,200 562,663 54% 1,046,200 Public Safety 13,097,700 5,414,082 41% 12,698,200 13,858,900 5,933,304 43% 13,699,033 Public Works 4,442,800 1,971,849 44% 4,174,800 4,204,200 1,987,055 47% 4,204,200 Parks & Recreation 4,553,500 2,208,130 48% 4,255,700 5,007,180 2,421,787 48% 5,007,180 Community Development 2,617,300 1,021,663 39% 2,395,900 3,095,500 1,122,629 36% 3,020,755 TOTAL- GF Operating 30,743,700 13,879,241 45% 29,132,600 32,123,280 14,586,619 45% 31,965,208 Transfers Out 850,000 - 0% 850,000 - - 0% - Capital Outlay 214,915 - 0% 214,900 60,000 - 0% 60,000 TOTAL -General Fund 31,808,615 13,879,241 44% 30,197,500 1 32,183,280 14,586,619 45% 32,025,208 • City Attorney — Expenditures for the City Attorney are currently at 27% compared to 55% during the same time period last fiscal year, due largely to the decreased utilization of the City Attorney. By the end of the fiscal year, departmental expenditures are anticipated to remain within the budgeted amount. • Ci . Clerk —The City Clerk's Office is currently 70% expended as of December 31 st, owing to the payment of insurance premiums mentioned earlier. As shown in the Chart, the Department was 68% expended at this point in the previous fiscal year, for the same reasons. It is anticipated that the department will complete the year within the budgeted amount. • Public Works — Department expenditures for Public Works are currently at 47% and last year was 44% for the same time period last fiscal year. It is anticipated that the department will complete the year within the budgeted amount. • Parks and Recreation — The department is recovering well from the impacts of the pandemic. As shown, department expenditures are at 48% at December 31 which is the same when compared to 48% prior year. It is anticipated that the department will complete the year within the budgeted amount. • Communi . Development — Expenses for Community Development reflect 36% expended at the mid -point. It is anticipated that the department will complete the year within the budgeted amount. City Council Meeting — FY 2025-26 Mid -Year Budget Review April 14, 2026 Page 7 of 7 In summary, General Fund revenues are coming in well and are anticipated to exceed budgeted expectations, while overall expenditures are within budgeted range and anticipated to complete the year under budget. If projections are met, the General Fund will complete the year in a positive position. OTHER FUNDS Although the focus of this report is the General Fund, a review of all other funds has also been reviewed and there are no concerns to report at this time. In fact, revenue sources are coming in strong, and expenditures are low for the majority of the special revenue funds. FISCAL IMPACT The proposed recommendation has no fiscal impact. STAFF RECOMMENDATIONS It is recommended that the City Council receive and file the Mid -Year Budget Review Report. PUBLIC NOTICE PROCESS — This item has been noticed through the regular agenda notification process. Prepared by: Bryan Chua Director of Finance