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Part one of two.
The City Council unanimously received and filed the Mid-Year Budget Update for 2024-25 on Monday, March 10.
The Sun will report on details of the discussion in next week’s issue.
Background
Due to space limits, the following covers only part of the issues discussed in the staff report.
“The economy is experiencing volatility, continued elevated inflation, and uncertainty in US economic policy, impacting local financial conditions. Recent federal policy developments may significantly impact the local economy and the budget. It is too early to determine the year-end impact of federal actions and it is imperative City staff continue to monitor closely,” according to the staff report by Finance Director/Treasurer Barbara Arenado.
“In Seal Beach, sales tax revenue is trending lower than budget projections, adding to fiscal pressures. With expenditures consistently outpacing revenues and no one-time revenues to offset the gap, the City anticipates additional budgetary constraints,” Arenado wrote.
“In Seal Beach, sales tax revenue is trending lower than budget projections, adding to fiscal pressures,” Arenado wrote.
(The sales tax that Seal Beach voters approved in November 2025 won’t go into effect until April 1, 2025.)
“With expenditures consistently outpacing revenues and no one-time revenues to offset the gap, the City anticipates additional budgetary constraints. However, the City continues to remain within budget while actively filling vacant positions in the Police Department and funding safety services, ensuring overall safety, mobility and quality of life for the City,” Arenado wrote.
“General Fund revenues recorded through December 2024 were reviewed in the context of FY 2023-2024 actual results, performance to date, and historical budget average. Property tax continues to be a consistent revenue source and is estimated to meet budget expectations. Sales tax performance has declined and the City’s sales tax consultant, HdL, has reduced revenues and flattened projections. Typically, an adjustment would be included but due to the anticipated revenue from the recently passed Measure GG, growth in revenues in this category would offset current declines. Utility Users Tax (UUT) and Transient Occupancy Tax (TOT) continue to outperform pre-pandemic levels,” Arenado wrote.
“As of the second quarter, General Fund non-personnel expenditures (maintenance and operations) align with historical trends through mid-year. The City is preparing for negotiations with the bargaining units and further adjustments may be necessary in the FY 2025-26 Budget. When those updates are available, staff will bring forth to the City Council for approval. The Mid-Year Report also documents immediate demands that were not included in the FY 2024-25 Budget. Through Strategic Planning and the previous budget process, the City Council gave direction to City Staff to allocate Revitalization funds to several different priority projects. City staff have completed projects such as the additional payment to CalPERS to reduce the pension liability as well as Polling for Measure GG. Projects and emergency needs have arisen and are outlined below and provided in the Budget Amendment Detail Report,” Arenado wrote.
Lifeguard Headquarters
“Previously, LGHQ experienced communication connectivity issues, prompting the Council to allocate $400,000 for the extension of fiber infrastructure to the facility. Of this amount, $28,920 was spent on design plans. With the funding already allocated for a permanent LGHQ/Police Substation replacement and the temporary communication enhancements performing satisfactorily, it is recommended to reallocate the remaining $371,080 toward other necessary improvements. The design plans will be incorporated into the overall LGHQ/Police Substation replacement design,” Arenado wrote.
“A reallocation of $100,000 is proposed, as funding for the permanent LGHQ/Police Substation replacement has been assigned,” Arenado wrote.
Pump Station
“The West End Pump Station, constructed in 1955, is a critical drainage facility for the southern portion of the City. Continuous improvement investments are necessary for the facility’s operation. The original budget included $700,000 for improvements, and the first phase has been completed. It is recommended to reduce the allocation by $245,000, leaving a revised budget of $455,000 to initiate the next phase of stormwater conveyance improvements, while addressing other urgent unfunded priorities,” Arenado wrote.
“An initial $350,000 was allocated to modernize the City’s Fleet Management Plan and potentially purchase the City’s leased fleet to align with the City’s fleet practices. A total of $278,814.10 has been expended. In alignment with the Fleet Management Plan, it is recommended to increase the budget by $54,814.10 from reallocated funds to replace the existing backhoe that is beyond its serviceable life. This equipment is crucial for construction, excavation, operations, and maintenance, where its failure would severely impact the City’s emergency response capabilities,” Arenado wrote.
“On February 10, 2025, the City Council approved the emergency purchase of two (2) Personal Watercraft (PWC) and was previously recorded in the Fleet Management Plan. The total amount of $43,374 will be memorialized in the Revitalization Funds and includes two (2) rescue sleds and two (2) sand trailers. PWCs are essential to the Marine Safety Department’s operations, particularly during the winter months when staffing is limited and the need for rapid response is at its highest. Lifeguards rely on these units for quick and effective rescues, and the safety and success of these operations depend on the reliable performance of the PWC,” Arenado wrote.
Labor
“During negotiations, certain bargaining groups were granted $4,000, while others received $2,000. The additional total of $117,682 ensures that the City remains in alignment with all bargaining groups and the one-time non-PERSable payment of $2,000 is for current, represented Orange County Employee Association (OCEA), Mid-Management and Confidential Employees Association (MMCEA) and the Seal Beach Supervisors and Professionals Association (SBSPA). The Revitalization Funds were originally sourced from American Rescue Plan Act (ARPA) funds, with one of the guiding principles being to compensate government employees who served during the pandemic. This funding increase aligns with those goals,” Arenado wrote.
IT Master Plan
“An additional $10,000 is adjusted for the Citywide Infrastructure Technology (IT) Master Plan. The IT Master Plan is a critical component necessary to understand and evaluate the current state of IT citywide and plan for the future in a methodical manner. Staff issued a request for proposals and received 14 responses. At the time of this staff report, proposals have been evaluated, and a limited number of respondents have been selected to interview. Based on cost proposals received, staff believes an additional $10,000 will be needed to support the IT Master Plan,” Arenado wrote.
Fee study
“As part of the City’s revitalization efforts, an ongoing review of revenue sources is vital to maintaining financial stability while fostering a thriving local business environment. $50,000 is requested for a regulatory and service fee study to ensure that the City’s fee structure remains fair, competitive, and aligned with the costs of providing services. Many neighboring cities periodically review and adjust their regulatory fees to reflect economic changes, inflation, and evolving business needs. Seal Beach has not conducted a comprehensive fee study, which may result in outdated fees that either overburden small businesses or fail to generate sufficient revenue to support essential City services. A study would provide data-driven insights to help the City establish an equitable fee structure that supports both economic growth and long-term sustainability,” Arenado wrote.
Public Works
“As we prepare for mid-year adjustments, the addition of $305,000 to the Public Works Permit – Expenditures account to correct an omission from last year’s budget preparation. Increasing this expenditure account by $305,000 will align with the corresponding revenue account, ensuring budgetary consistency and proper fund allocation,” Arenado wrote.
Vegetation management
“In response to fuel modification recommendations, tree trimming and vegetation removal work has been completed. The associated costs were expensed from the Landscape Maintenance account,” Arenado wrote.
“Staff is recommending allocating $40,000 from (the) General Fund balance to this account to ensure that proper landscape maintenance continues throughout the remainder of the fiscal year,” Arenado wrote.
McGaugh
“The City has a joint-use agreement with the Los Alamitos Unified School District (LAUSD) for the McGaugh Elementary School pool and gym. As part of this agreement, both the City and LAUSD share responsibility for costs related to repairs and improvements. A recommended allocation of $197,500 is requested from the General Fund for the recent unanticipated roofing repairs and upcoming pool screening,” Arenado wrote.
