Item 21 - Early Direction for the Fiscal Year 2026-27 Budget

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Early Direction for the Fiscal Year 2026-27 Budget April 7, 2026 Page 11 5 6 9 0 Miscellaneous Fees The City charges fees for services provided to individuals that do not benefit the public at large (e.g., building permits). Per state law, the City cannot charge more than the cost to provide these services. To keep pace with rising costs of doing business, including compensation and service-related expenses, staff recommends adjusting miscellaneous fees each year. Last year, the budget included a 4.76% increase, reflecting higher compensation for employees providing these services (including salary and benefits) and increased service-related costs. The Consumer Price Index for Los Angeles-Long Beach-Anaheim increased by 3.59% for the year ending December 2025. However, personnel costs, which account for a significant share of the cost of providing fee-based services, continue to increase at a rate above the CPI. Most employee bargaining groups have negotiated wage increases of 5% for FY 2025-26 and 4% for FY 2026-27, with SEIU and SEIU PTNCS bargaining groups still in negotiations. Costs for workers' compensation and general liability have risen by 10% and 9%, respectively, and employee pension unfunded liability contributions will increase by 14% for FY 2026-27. Inflationary factors are also driving increases in other service-related costs, such as contract services and operational expenses. Based on this information, an increase of up to 4% is justified to ensure the City remains in compliance with state law. Staff seeks City Council concurrence on a recommended 4% increase in miscellaneous fees for the FY 2026-27 budget. Santa Ana Regional Transportation Center The Santa Ana Regional Transportation Center (SARTC) serves as the City’s primary multimodal transit facility, providing regional rail and bus connections and serving as a gateway to Downtown and the Civic Center area. In addition to transit operations, the facility includes leasable commercial and office space. Since FY 2021-22, the General Fund has provided an annual subsidy of approximately $1.1 million to support facility maintenance, security, utilities, and related operating costs. In FY 2021-22, the City also provided $5.4 million in one-time funding for deferred maintenance improvements to address facility conditions, improve code compliance, and enhance the building’s overall marketability. These improvements were intended to better position the facility to attract tenants and increase long-term revenue potential. Despite these investments, the facility still has significant vacant leasable space. Staff will continue to actively pursue leasing opportunities and explore strategies to increase occupancy, generating additional revenue and improving cost recovery. The anticipated 2026 start of OC Streetcar operations may further enhance regional connectivity and activity around the transportation center, thereby supporting future leasing efforts. The City cannot continue to sustain the full $1.1 million annual General Fund subsidy without raising revenue or reducing service levels in other areas. Accordingly, the Public Works