This post was originally published on this site
Following a public hearing, the council on Monday, June 9, unanimously adopted the city budget for fiscal year 2025-2026.
What follows are highlights from the meeting.
Finance Director/Treasurer Barbara Arenado said there were a few minor changes to the document. “There were no budgetary changes from the new update,” Arenado said.
She said revenues for all of the city’s funds for this year totaled $82.8 million. Expenditures for all city funds totaled $108 million. The capital improvement projects for 2025-26, including carryovers from prior years, came to $27.4 million.
The General Fund revenues are expected to be $48.2 million and General Fund expenditures are expected to be $48.1 million.
“Last year we faced $6 million in cuts,” Arenado said.
“This year Measure GG provides $3 million to maintain those city services,” Arenado said.
District Four Councilwoman Patty Senecal expressed concerns about growing expenditures.
“My question has to do with the expenditure side [which] is moving up faster than our revenue and our projections, how soon can you tell if our projections for tax revenue are off?” Senecal asked.
“How fast can we pivot? Do we have a plan B?” Senecal asked.
Arenado said the city receives sales tax payments every month. She said there was about a four-month lag on those payments. “They send us a payment, a payment, and a catch-up payment,” she said.
“We would know relatively early,” Arenado said.
“Would it be helpful um to us as council members and just the general public if we were to say, instead of doing just the midyear review, maybe every other or once a quarter just do a quick summary on the revenues coming in just so we all have an idea?” Senecal asked.
“We can and I have done that before. A lot of times what happens, we report back quarterly the first quarter and the third quarter of the year,” Arenado said.
She also said most of the city’s revenues come in mid-year.
“I’ve met already with interim city manager Gallegos and we’ve already talked about having one-on-ones with council,” Arenado said.
“We’ve talked about meeting in closed session,” Arenado said.
“It’s a little bit complicated because the first quarter revenues haven’t come in strong, so usually I come back and say there’s nothing to report,” Arenado said.
“If there was a downturn, I would bring that back immediately,” Arenado said.
Senecal said she would like to see something so investors, residents and businesses have a sense of where the city is at.
She said she highly recommended some type of quarterly update.
Senecal and District Three Councilwoman/Mayor Lisa Landau both said the lifeguard headquarters needed to be updated. (The Sun has requested a copy of the assessment of the building.) “I’d like to make sure that remains a priority for us to keep moving forward,” Senecal said.
District One Councilman Joe Kalmick said that one of the things on the forefront of all their minds to look at revenue opportunities.
Public hearing
One man suggested the city bring in a hotel.
Teresa Miller called on Seal Beach to become a hybrid contract city to save costs. She said operating costs were projected to grow 3.3% while revenues were projected to increase by 2.2%. “That is inverse math,” Miller said.
She said the budget anticipates a 22.2% increase in retirement costs from the prior year.
Background
“The Budget reflects strong fiscal stewardship, maintaining the City Council’s 25% General Fund reserve target to protect against natural disasters, economic uncertainty, and fiscal disruptions. To bolster financial resilience, the City has set aside an additional $1.5 million in economic reserves. Continued efforts to modernize City operations and technology are improving efficiency and service delivery. The City also made a discretionary payment to reduce its CalPERS unfunded pension liability in 2024 and is allocating $250,000 in FY 2025–26 to support a formal pension paydown plan. Funding has also been dedicated to the Fleet Fund to ensure long-term maintenance and planning for emergency and service vehicles,” according to the staff report by Finance Director/City Treasurer Barbara Arenado.
Revenue
“The City’s FY 2025-26 revenue and expenditure assumptions reflect a wide range of economic, policy, and operational factors, including macroeconomic conditions, local development patterns, and City Council priorities. Property tax revenues are projected to increase by 6.1%, driven largely by reassessment of existing properties in a strong residential market. Sales tax revenues, including those from Measures BB and GG, are forecasted to grow modestly by 3.3% following a period of cautious consumer spending and may have impacts due to individuals cautious of discretionary spending in a volatile market. Utility Users Tax is expected to grow by 6.7% due to rising energy costs, while Transient Occupancy Tax will remain flat as hotel occupancy has reached capacity. Charges for Services are projected to increase by 6.4%, especially with growing use of the Tennis and Pickleball Center, while other revenues are expected to remain relatively stable,” Arenado wrote.
Expenditures
“On the expenditure side, the City anticipates increases in personnel and contract-related costs. Retirement contributions are projected to rise by 11.9%, primarily due to CalPERS adjustments to actuarial assumptions and a reduced discount rate. Health benefits and other compensation-related costs have increased by 22.6%, including a 15% rise in health insurance. Total Fire services costs have grown by 4.5%, and California Joint Powers Insurance Authority (CJPIA) insurance premiums increased by 12.6%. Day-to-day operational costs are expected to climb due to inflation, utility increases, and contract renewals. Additionally, shifts in economic policy and international tariffs can substantially impact the City’s fiscal outlook and budgetary assumptions. The City continues to regularly monitor these trends closely and adjusts its fiscal planning accordingly to ensure essential City services are met,” Arenado wrote.
“The Proposed FY 2025-26 Budget is balanced and was made available on the City’s website,” Arenado wrote.
“Previously, the Public Works Department had two (2) Maintenance Services Supervisor positions. One (1) of these positions is now vacant and will not be filled. The responsibilities of the vacated role have been redistributed between the City Arborist/Maintenance Services Supervisor and the Water Services Supervisor. To reflect the expanded scope of duties and better align staffing with operational needs, the budget includes the following reclassifications: (1) the City Arborist/Maintenance Services Supervisor is proposed to be reclassified as Public Works Superintendent; and (2) the Water Services Supervisor is proposed to be reclassified as Senior Utilities Supervisor. Additionally, the Water Operator position is proposed to be reclassified as Cross Connection Specialist to ensure compliance with new state regulatory requirements for cross connection control, effective July 1, 2025,” Arenado wrote.
“The Proposed FY 2025-26 General Fund Budget includes estimated revenues of $48.2 million, operating expenditures of $48.1 million and capital project expenditures of $11.8 million a
“Ordinance 1643 Section 4.50.125 of the City Municipal Code requires that the rate of Utility Users Tax (UUT) be reviewed annually. Based on the Fiscal Year 2025- 26 revenue projections, UUT remains the third largest revenue source to the General Fund providing $5.44 million of General Fund revenue. The current Utility Users Tax rate is 10 percent on electric, gas, and telecommunications and 9 percent on pre-paid wireless services,” Arenado wrote.
Fees
City fees will be increased to parking (see “Seal Beach City Council OKs $3/hr beach parking,” at sunnews.org), updates to parking fines, and changes to pickleball reservation fees. “The appropriations limit for Fiscal Year 2025-26 is $41,380,608. It should be noted that only revenues derived from taxes are subject to the appropriations limit,” Arenado wrote.
(For more on the city’s finances, see “A look at the five-year forecast,” at sunnews.org.)
