My 3.3.26 Meeting Summary

At our meeting this week, we received and discussed the audited Annual Comprehensive Financial Report (ACFR) for the fiscsal year ended 6.30.25. 

There weren't any surprises from the audit - FY25 ended with a managable deficit as anticipated.  There were a two items that I wanted to call out.

 - The Successor Agency, which is the entity that took on responsibility for funds after the prior Redevelopment Agency was folded due to state level action that dissolved RDAs in 2012, had been receiving funding from the County in order to wind down the activities of the RDA.  The Successor Agency completely wound down in FY25, and as a result the revenue related to the administration of the Successor Agency decreased signficantly - nearly $350K.  This will go away completely in the out years, and is the cause of projected revenue decreases in the next few years.

- The other item I wanted to call out is what did not happen.  Our auditors did not identify any signficant deficiencies or material weaknesses in internal controls.  Internal Controls are critical in the financial operation of the City.  As a reminder, starting in FY20 through FY23, our auditors identified both significant deficiencies and material weaknesses in internal controls.  They were serious findings, and for years the City was unable to remdiate them.  As we have brought on different staff, the City has been able to address these areas and as was the case last year, in the current year there were also no findings.  

Upcoming Meeting 3.3.26

At our next meeting, there is one signficant item we will be discussing and that is the audited Annual Comprehensive Financial Report (ACFR) for the fiscsal year ended 6.30.25.  It is a bit late - typically these are completed in the December timeframe following the end of the fiscal year, however there were some delays due to staffing at both the City and with our auditors.

If you have any thoughts or questions on the above, please let me know.

My 2.3.26 Meeting Summary

Last night the Council was introduced to four new staff members, including a neew police officer, and three new administrative personel.  And while staff turnover is a normal circumstance, it is great to have a full compliment of staff to support the community.  There remains one role that is still open in the Public Works area.

- We also discussed the timeline of acitvities related to a sales tax measure, and the renewal of the LMD.  The discussion focused on what role the Council has, what role staff has, and when various activities will take place.  This included how and when ballot language would be drafted, when staff would hold informational town halls to inform about each measure, and the timing of each.  The Council gave its preference that staff hold two informational townhalls - one each before and after ballots were mailed to residents.

There was a question posed by a resident which I wanted to address.  The gist of the question was, given the City has a healthy reserve, why is it appropriate to seek a tax increase rather than spend down reserves?

At first glance, it may not make sense to hear that the City needs more tax revenue when it is maintaining a large reserve.  After all, reserves are like savings.  But savings alone do not keep a a household or a City financially healthy if ongoing operations exceed revenue.

Reserve spending may be appropriate in some circustnaces.  Things like emergency response, smoothing during short term economic downturns, one time investments for major equipment, or even costs to cover efforts during reorganization may be appropriate.  These are all one time in nature and time bound.

A city’s reserve works like a rainy-day fund. It exists to help during emergencies, economic downturns, or unexpected events where a large expenditure may be required.  Reserves are not designed to pay for routine, ongoing costs such as wages or maintenance.  Reserves are a fixed pool of money. Operating deficits repeat every year. If we spend reserves on routine services, it is choosing to spend down a limited asset to cover an unlimited problem. That math never works. It only postpones the moment when the money runs out.

At our December 2, 2025 meeting, staff presented a projection of the general fund if no new revenues were implemented:

And the gap will likely grow.  City revenue is largely based on property taxes.  Because the increase in property taxes is capped, inflation has been outpacing proprty taxes for several years.  This means that while our operational costs rise, our revenues are not able to rise at the same rate.  With a sales tax that puts us inline with neighboring cities, the projection looks quite a bit different:

There is also a fairness issue. Using yesterday’s savings to pay today’s bills pushes the cost of current services onto future residents. Rather than address the underlying cause of operational deficits, using reserves asks future generationsn to solve and pay for the the services that are being consumed today.  We as a Council are elected to make decisions and address issues that impact the City.  We know this is an issue, and it should be addressed.

Increasing tax revenue addresses the core problem. It brings ongoing revenue in line with ongoing costs. That balance protects essential services, preserves reserves for true emergencies, and helps ensure the city remains stable and resilient over the long term. In short, savings provide security, and in some cases can buy some time.  But only stable revenue buys sustainability.and keeps the City running.

Upcoming 2.3.26

At our next meeting, we will be discussing one significant item:

- A discussion of a proposed timeline for a sales and use tax measure and the extension of the Landscape Maintenance District.

Please let me know if you have thoughts or questions on the above.