HomeMy WebLinkAboutPresentation - Item 21 - FY2026-27 Early Direction_V17Early DirectionFY 2026 -27 GENERAL FUND BUDGET
APRIL 7, 2026
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Community Engagement efforts
How we engaged with Santa Ana Residents
Neighborhood
Association (NA) &
COM -Link Meetings
Engagements
across all Wards
Total Meeting
Attendees
Community Priorities
Survey Submissions
Non-profit Listening
Tours
Committee /
Commission Meetings
Citywide Events
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292 204 >1200
4 3 2
Community
Priorities Survey
Contacted every Council Ward
Vietnamese & Spanish Interpretation services are offered
at every meeting
Survey available in English, Spanish, and
Vietnamese
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GENERAL FUND INFORMATION
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FY2026 -27 General Fund Ten -Year Outlook Assumptions
Revenue Assumptions Expenditure Assumptions
•Property Tax : 2.79% for FY26 -27; 3.1% growth
thereafter
•Sales Tax : Revised to 1.9% for FY26 -27; 3.1%
thereafter
•CPI assumption : inflation factors for all other
revenues
⚬Fluctuations in future years
⚬Only recurring revenues & expenditures
included
•MOUs : 5% increase in FY2025 -26; 4% increase in
FY26 -27
•Labor below top step : negotiated increase + 5%
merit step increases
•Pension Unfunded Liability : an additional $2.2M
required contribution in FY26 -27 based on
updated CalPERS actuarial information
•OC Fire Authority : 3.0% annual contract increase
in FY26 -27, and 4.5% annually thereafter
•OC Streetcar Operations : Annual estimate of
$2M
•Pension Stabilization Contributions:
Contributions and uses to smooth future pension
costs; inflation applied to all other spending
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FY2026 -27 General Fund Ten -Year Outlook Assumptions
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BALANCING STRATEGIES
Expenditure Considerations For Rebalancing
Mandates required by law,
Memoranda of Understanding
(MOU’s), bond covenants, public
safety obligations, and land use
regulations
Core services that protect City
resources and minimize liability
exposure
Programs and services that are
not legally required but
enhance the quality of life
MUST HAVES SHOULD HAVES NICE TO HAVES
Note: These spending categories are tools to support policy discussion by helping evaluate service
levels and identify potential expenditure adjustments
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Credit Card Processing Fee
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•Credit card fees currently paid by the City, including the General Fund
•Online and card payments increased significantly
•Estimated $320,000 annually in costs that could be recovered
•Proposed 2.50% fee is based on current costs to ensure cost recovery without overcharging
•Would remove the current $5,000 transaction limit and provide more flexibility
Note: Shall staff add a 2.50% credit card processing fee to the Miscellaneous Fee Schedule?
Technology Cost Recovery Evaluation
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•City anticipates launching a new permitting and licensing software system in June 2026
•System will improve processing times and provide a more user -friendly online experience
•Staff continues to assess the full costs of maintaining and supporting enhanced technologies
throughout the City
•Any fee would be limited to the actual cost of providing these services and would comply with
state law
Note: Staff may return to City Council to discuss technology cost recovery options at a later date
ONE-TIME SPENDING
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•As reported in the Mid -Year Update (March 03, 2026), the estimated spendable fund balance for one -
time expenditures in the general fund is $11.63 million
•The following slides include potential options for utilizing this one -time funding
One -Time Spending
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Workers’Compensation Fund
Current Status :
•Reserve shortfall of approximately $16.0 million
•Ongoing annual costs of about $9.7 million, only $5.9 million was originally budgeted in the current fiscal year
•Increased costs driven by higher claims activity and medical expenses
Setting aside one -time funds would help strengthen reserves, reduce the shortfall, and support the Fund’s long -
term financial stability.
Shall staff include a one -time $2.5 million transfer to the Workers’ Compensation Fund in FY 2026 -27?
One -Time Spending
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General Liability Fund
Current Status :
•Reserve shortfall of approximately $1.7 million
•Used to pay claims and legal settlements
•Ongoing exposure from claims, litigation, and potential future liabilities
Setting aside one -time funds would help strengthen reserves, reduce the shortfall, and provide additional capacity
for potential claim obligations
Shall staff include a one -time $1.7 million transfer to the General Liability Fund in FY 2026 -27?
One -Time Spending
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Pension Cost Stabilization (Section 115 Trust)
•Helps offset rising CalPERS pension costs
•Costs increase when CalPERS investment returns fall below the 6.8% target
•Significant projected increases in future pension contributions
•$3 million contributed in FY 2024 -25 and $1 million in FY 2025 -26
•Helps earn investment returns, reduce volatility, and ensure funds are available for future pension cost increases
Shall staff include a one -time $1.5 million contribution to the Section 115 Trust in FY 2026 -27?
Sanitation Fund (Street Sweeping)
•Staff exploring a range of options to address the funding gap, such as:
⚬Adjusting service frequency
⚬Implementing operational efficiencies
⚬Providing services in -house
⚬Seeking alternative funding sources
•Current service levels cannot be maintained within existing revenues
Shall staff utilize $900,000 in one -time funding to offset the projected shortfall for FY26 -27
while staff explores the above options?
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High -Priority One -Time Projects ($2 Million)
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One -time resources are proposed to address high -priority needs and maintain flexibility during the fiscal year
•$1 million in Public Works for the highest priority facility repairs and improvements
(such as Bowers Museum, Eddie West Field Stadium, community centers, and fire stations)
•$1 million in Non -Departmental for unforeseen high -priority needs
Shall staff include the $2 million one -time allocation for these projects in the FY2026 -27 budget?
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One -Time General Fund Uses
RECURRING OPERATING BUDGET RECOMMENDATIONS
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Miscellaneous Fees
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Fees are charged for services to individuals and must not exceed the cost of providing those services
•Employee wage increases of 5% (FY 2025 -26) and 4% (FY 2026 -27)
•Workers’ compensation and liability costs increased by 10% and 9%
•Pension and benefit costs continue to rise
•Inflation impacts contract services and operational costs
Shall staff include a miscellaneous fee increase of 4% in the FY2026 -27 budget based on increased
service costs?
Movies at the Park
$93,000
$498,000
$30,000
Fiestas Patrias -7oK
Chicano Heritage -11.5K
July 4th Celebration -7.5K
5k/10k Run -3.5K
Tet/Lunar Festival -6.6K
Movies at the Park -8.2K
Noche De Altares -38K
Juneteenth -3.7K
$983,000
$115,000
$80,000
$127,000
$20,000
Tet Festival
City Events
Events & # Attendees Cost Offset Strategies
•Increase sponsorship revenue
•Implement or expand participant and vendor
fees
•Evaluate event cost structure and scalability of
service
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5K/10K
$20,000
Boards, Commissions & Committees
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Arts & Culture
Should funding levels for Arts &
Culture programming be
maintained or reduced?
$965,000
Total Arts & Culture
Spending
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Immigration -Related Services
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Current Year Spending for Immigration -
Related Services:
•Universal Legal Defense Program: $300,000
•Ayuda Sin Fronteras Program
⚬Round 1: $100,000
⚬Round 2: $150,000
⚬Round 3: $150,000
⚬Potential Round 4 Request: $150,000
•Total Potential (Current Year): $850,000
Program Outcomes (Round 1 & 2)
•250 households served (487 individuals)
•Type of Assistance:
⚬187 households –utilities only
⚬47 households –rental and utilities
⚬16 households –rental only
$850,000
Animal Care Shelter
Good News Challenges
Debt on the shelter facility will be paid off
in FY2025 -26, saving approximately $750K
in annual debt service costs
Annual Savings
Shelter operating costs have doubled
over the past five years and are expected
to continue rising
~$750,000
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Note: Staff will evaluate options to improve long-term cost sustainability, including service delivery, partnerships,
and cost recovery strategies
County Seat Impacts
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•A large amount of government-owned parcels not generating property tax in the City, yet still utilizing
public services such as right-of-way maintenance
•Additional impacts of homelessness due to the County jail and social service facilities in the City
•Increased public safety costs to support safety and traffic management
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NON-GENERAL FUND HIGHLIGHTS
SARTC Subsidy
•General Fund began subsidizing SARTC in FY2021-22 with a $1.1 million subsidy
•One -time funding of $5.4 million was also appropriated in the same fiscal year
•The city cannot sustain the annual subsidy at the current rate
•Staff will work to increase lease revenue and improve cost recovery to reduce General Fund support
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Building Maintenance Operations
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Building Maintenance Operations
•Transition Building Maintenance operations to the General Fund to simplify administration
•Costs for non -General Fund activities will continue to be covered through the Indirect Cost
Allocation Plan
•Change is administrative and will not impact the General Fund on an ongoing basis
•$930,000 estimated spendable fund balance transferred to the General Fund upon fund
closure, with staff to return with recommendations for high -priority facility repairs
•One -time charges on new development to help fund capital improvements required to
accommodate growth
•Examples include:
⚬Transportation Improvements
⚬Traffic signal upgrades
⚬Street and intersection capacity enhancements
⚬Storm drainage facilities
⚬Other public infrastructure
The Public Works Agency is finalizing a Development Impact Fee Study and will provide an
update to the City Council at a later date
Developer Impact Fees
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FOLLOW UP & NEXT STEPS
Next Steps
May 5
May TBD
May 19
June 2
June 16
Preliminary results of Budget Priorities Survey & other outreach efforts,
draft General Fund Summary
Draft versions: Budget, Miscellaneous Fees & Capital Improvement
Program (CIP)
Incorporating City Council feedback & alignment with community priorities
Public Hearing, Approve Resolution of Classification & Compensation
Plan, Adoption of Miscellaneous Fee Schedule & CIP
2nd reading to adopt Budget Ordinance
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READY FOR DIRECTION
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