HomeMy WebLinkAboutItem 5 - PresentationCity of Palm SpringsBUDGET STUDY SESSIONFISCAL YEAR 2025-26FISCAL YEAR 2026-27MAY 22, 2025
City of Palm SpringsProposed Budget FY 26&27 – STRATEGIC PLAN
City of Palm SpringsProposed Budget FY 26&27 – DIRECTOR OF FINANCE & TREASURY COMMENTSDirector of Finance & Treasury Comments:•This biennial budget has been produced using automated software pulling the financial information directly from the City's ERP system. The document produced will be a 260-page document with pages for every department and fund, debuting at the June 11th meeting.•The City can move forward with strategic plan initiatives by using funding sources other than the General Fund.•The numbers presented are still fluid but are directionally correct. The numbers will change.•The General Fund has an operating deficit that needs to be solved. No material new spend in the General Fund.•A pause after each section presented for questions, discussion, and City Council direction.
City of Palm SpringsGENERAL FUND
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDFY24/25 FY25/26 FY26/27RevenueForecast Draft Budget Draft BudgetTransient Occupancy Tax 48,490,196 49,105,600 49,586,656Property Taxes 38,251,390 38,261,300 38,643,913Sales and Use Taxes 28,537,700 29,839,008 30,167,739Permits, Fines, and Fees 14,065,355 15,000,113 15,117,762Utility Users Tax 10,986,817 11,904,900 12,023,949Motor Vehicle In-Lieu Tax 6,695,932 7,060,800 7,131,408Other Taxes 7,801,013 6,998,080 7,067,900Miscellaneous Income 4,636,799 4,597,705 4,629,095Franchise Tax 4,769,609 4,362,900 4,406,529Interest Income 3,751,433 3,833,400 3,871,734Cannabis Tax 1,118,938 938,100 953,481Total Revenue $169,105,183 $171,901,906 $173,600,166Transfers from Other Funds 5,000,000 0 0Total Revenue & Transfers $174,105,183 $171,901,906 $173,600,166Revenue Highlights FY26 vs FY25:•TOT remains largest revenue line item and stays stable around $49m•Property Tax assume steady low single digit growth at 1%•Sales and Use Tax to grow 5% in FY26•Permits, Fines & Fees impacted by fee study by +$1 million in FY26
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDRevenue Highlights:•Top 3 Revenue Line Items continue to generate 68% of Total Revenues•All Revenue Lines expected to remain stable•Conservatively budgeted, due to uncertain economic environment
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDFY24/25 FY25/26 FY26/27ExpensesForecast Draft Budget Draft BudgetAdmin & Economic Development 8,999,821 8,606,956 9,123,098Development Services 15,647,809 19,483,364 23,464,006Fire Department 29,827,721 30,242,058 31,834,383General Government 21,611,570 22,077,165 23,046,656Library 3,255,592 3,479,407 3,639,342Miscellaneous Expense 1,912,858 2,030,617 1,746,907Parks and Recreation 8,463,681 11,256,852 11,749,996Police Department 44,086,215 47,555,231 49,786,098Public Works 14,862,900 13,281,898 13,704,939Tourism and Community Support 8,882,647 8,170,955 8,603,201Total Operating Expenses $157,550,815 $166,184,504 $176,698,625Transfers to Other Funds 15,159,587 6,805,837 6,805,837Total Expense & Transfers $172,710,402 $172,990,341 $183,504,462Operating Surplus/(Deficit) $1,394,782 ($1,088,435) ($9,904,296)Expense Highlights:•Increase in Salaries & Benefits for all Departments ($4m FY26 & $6m FY27)•Development Services increase Navigation Center ($1.4m FY26 & $4.9m FY27)•Parks & Recs increase by transfer in of Park Maint. ($1.5m in FY26)•Public Works decrease by transfer out of Park Maint. ($1.5m in FY26)
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDExpenses FY26 and FY27 by Function – Governmental Activities
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDTrend Expenses FY22 – FY27:•Salaries & Benefits grew from $71m to $107m•Contractual Services increased from $13m to $26m•Repair & Maintenance (incl. Deferred Maint. & Fleet Replacement) from $9m to $16m
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDTrend Expenses in % of Revenue FY22 – FY27:•Salaries & Benefits grew from 42% in FY22 to 62% in FY27•Contractual Services increased from 8% in FY22 to 15% in FY27•Repair & Maintenance (incl. Deferred Maint. & Fleet Replacement) from 5% in FY22 to 9% in FY27
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUND SUPPORT FROM OTHER FUNDSSustainability Budget FY2025-2026 for $1.4 million over 2 Years support the City’s Programs:•Turf Conversion (Program to match Desert Water Agency Turf Conversion Rebates)•Energy Efficiency for Low-Income Housing (Max. Insulation, efficient HVAC & Appliances to reduce fossil fuel use)•Heat and Shade Grant (Study the impact of heat on the transportation system)Beg Fund Transfer Transfer End FundFundBalanceInRevenue Expenses Out Balance Use of FundsRecycling Fund 995,912 - 399,500 (403,851) - 991,561 Educate on Recycling Efforts within CitySustainability Fund 2,448,242 - 883,300 (950,760) - 2,380,782 Support City's Sustainability ProgramAir Quality Mgmt Fund 175,400 - 61,900 (100,000) - 137,300 South Coast AQMD Clean Air ProgramsTotal 3,619,555$ -$ 1,344,700$ (1,454,611)$ -$ 3,509,644$ Beg Fund Transfer Transfer End FundFundBalanceInRevenue Expenses Out Balance Use of FundsRecycling Fund 991,561 - 282,295 (294,121) - 979,736 Educate on Recycling Efforts within CitySustainability Fund 2,380,782 - 789,270 (859,674) - 2,310,378 Support City's Sustainability ProgramAir Quality Mgmt Fund 137,300 - 62,519 (100,650) - 99,169 South Coast AQMD Clean Air ProgramsTotal 3,509,644$ -$ 1,134,084$ (1,254,445)$ -$ 3,389,283$ Fiscal Year 2025-26 SustainabilityFiscal Year 2026-27 Sustainability
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUND SUPPORT FROM OTHER FUNDSBeg Fund End FundFundBalance Revenue Expenses Balance Use of FundsSafety Augmentation Fund 3,911,345 - 1,847,000 (2,650,585) 3,107,761 Public SafetyCFD Public Safety #1 Fund 2,780,820 - 1,307,500 (1,551,546) 2,536,774 Public SafetyTotal 6,692,165$ -$ 3,154,500$ (4,202,130)$ -$ 5,644,535$ Beg Fund End FundFundBalance Transfer In Revenue Expenses Balance Use of FundsSafety Augmentation Fund 3,107,761 - 1,865,470 (2,748,890) - 2,224,341 Public SafetyCFD Public Safety #1 Fund 2,536,774 - 1,320,575 (1,056,134) - 2,801,215 Public SafetyTotal 5,644,535$ -$ 3,186,045$ (3,805,024)$ -$ 5,025,556$ Fiscal Year 2026-27 Public SafetyFiscal Year 2025-26 Public SafetyTransfer OutTransfer InTransfer OutThese Public Safety funds provide funding to support General Fund for the following:•Safety Augmentation Fund = 4 Firefighters and 4 Police Officers (approx. $1.5m annually)•CFD Public Safety #1 Fund = 2 Firefighters and 2 Police Officers (approx. $1m annually)•Partial Funding for Firearms Training Facility ($1 million FY26&27) and Fire Truck ($0.6 million FY26)
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDNon-Operating Highlights FY25/26:•Grant Funding for Police Department from BSCC (Carryover of $2.1m in FY25/26)•Grant Funding Encampment Resolution Fund (ERF) for Development Services from CA Dept of Housing (Carryover of $4.8m in FY25/26)•Grant Funding for Navigation Center from HHAP (Carryover of $3.5m in FY25/26)•Council Set Aside mainly for Desert Highland SFR Development ($2m) as forgivable loanNon-Operating FY24/25 FY25/26 FY26/27Income/ExpensesForecast Draft Budget Draft BudgetGrant Revenue 10,529,687 11,819,172 2,832,283Grant Expense (10,529,687) (11,819,172) (2,832,283)Council Set Aside Expense (6,130,788) (2,900,000) 0CalPERS Payment (28,500,000)Total Non-Operating Surplus/(Deficit) ($34,630,788) ($2,900,000) $0
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDSummary of Trend General Fund FY22 – FY27:•Major Revenue Lines will likely be flat to small growth•Operating Expenses continues to grow•Fund Balance declines from •Annual Deficits•Transfers (CalPERS & Afford. Housing)•Large Downpayment CalPERS in June 2025•Increase Minimum Fund Balance
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDGeneral Fund Ending Balance ReconciliationFY24/25 FY25/26 FY26/27Fund BalancesForecast Draft Budget Draft BudgetCalPERS Reserve 17,750,000 23,750,000 29,750,000Affordable Housing Reserve 9,166,762 12,166,762 15,166,762Reserve Economic Incentive 166,667 166,667 166,667Reserve Cannabis Programs 70,917 89,679 108,749Minimum Fund Balance (20% of OpEx) 32,934,476 33,236,901 35,339,725Unassigned Funds 52,602,144 39,292,522 18,266,332TOTAL Year End Balance $112,690,966 $108,702,531 $98,798,235
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDUnassigned Funds:Sharp decline, due to•Deficits in FY26 & FY27•Continued Funding of CalPERS & Afford. Housing from fund balance (not surplus)Unassigned Funds - Balance ReconciliationFY25/26 FY26/27DescriptionDraft Budget Draft BudgetUnassigned Fund - Beginning Balance $52,602,144 $39,292,522Surplus / (Deficit) (3,988,435) (9,904,296)CalPERS Pension Transfer (6,000,000) (6,000,000)TOT to Affordable Housing Transfer (3,000,000) (3,000,000)Increase in Reserve Cannabis (18,762) (19,070)Increase in Min. Fund Balance (302,425) (2,102,824)Unassigned Funds - Ending Balance $39,292,522 $18,266,332
City of Palm SpringsProposed Budget FY 26&27 – GENERAL FUNDLooking Ahead:These opportunities have the potential to increase tax revenue for the City in the future:•Plaza Theater opens in December 2025•Chick-fil-A planned opening in 2026•In-N-Out Burger planned opening in 2027•Fulfillment Center in North Palm Springs (740k square-foot) scheduled to open end of 2026 •Second Fulfillment Center in North Palm Springs with two buildings (1.9m square-foot) planned opening late 2026 or early 2027•College of the Desert – Palm Springs Campus plans to open in 2027•Convention Center Master Plan Improvements expected to be completed in 2029
City of Palm SpringsCAPITAL PROJECTS
City of Palm SpringsProposed Budget FY 26&27 – CAPITAL PROJECTSFiscal Year 2025-26 Capital BudgetFundBeg Fund BalanceRevenue Transfer In Expenditures Transfer OutEnding Fund BalanceUse of FundsGas Tax 3,035,316 1,144,400 - 975,000 - 3,204,716 StreetsMeasure A 16,112,646 8,372,277 - 14,267,489 - 10,217,435 StreetsDrainage 245,867 342,300 - 540,000 - 48,167 DrainageRMRA 771,903 1,150,600 - 1,000,000 - 922,503 TransportationQuimby 3,660,550 572,000 - 2,000,000 - 2,232,550 Parks & RecMeasure J 43,505,623 22,572,500 - 19,191,375 3,135,806 43,750,942 GeneralCapital Fund 35,221,942 36,950,000 - 40,450,000 - 31,721,942 VariousTotal 102,553,847 71,104,077 - 78,423,864 3,135,806 92,098,255 Fiscal Year 2026-27 Capital BudgetFundBeg Fund BalanceRevenue Transfer In Expenditures Transfer OutEnding Fund BalanceUse of FundsGas Tax 3,204,716 1,155,784 - 675,000 - 3,685,500 StreetsMeasure A 10,217,435 7,892,536 - 8,626,164 - 9,483,806 StreetsDrainage 48,167 345,723 - 200,000 - 193,890 DrainageRMRA 922,503 1,162,106 - - - 2,084,609 TransportationQuimby 2,232,550 577,720 - 2,000,000 - 810,270 Parks & RecMeasure J 43,750,942 22,899,838 - 16,750,000 3,137,913 46,762,867 GeneralCapital Fund 31,721,942 31,400,000 - 32,500,000 - 30,621,942 VariousTotal 92,098,255 65,433,707 - 60,751,164 3,137,913 93,642,884 NOTE THAT ANY CAPITAL FOR THE AIRPORT OR WASTEWATER PLANT WILL GET FUNDED OUT OF THEIR OWN FUND
City of Palm SpringsProposed Budget FY 26&27 – CAPITAL PROJECTSCapital Project Spend FY2026 & FY2027• Total of $139 million FY26 & FY27• Roads & Bridges $104 million FY26 & FY27,aligning with City Council’s goals of infrastructure improvement
City of Palm SpringsProposed Budget FY 26&27 – CAPITAL PROJECTSProject Name ExpenseTotal BudgetFY 2026 BudgetFY 2027 Budget Funding Source StatusIndian Union Pacific RR Bridge 15,932,883 60,773,214 14,000,000 14,000,000 Capital/Measure A/WWTP Under Construction, expected completion late 2027Ramon Road Bridge 660,359 52,236,315 1,000,000 10,000,000 Capital/Measure A Completing Right of Way Phase, expect bid mid 2026S Palm Canyon Tahquitz Creek Bridge266,817 15,088,386 7,000,000 7,000,000 Capital/Measure A Under Construction, expected completion late 2027EPC Palm Canyon Wash Bridge 476,529 12,113,936 500,000 5,000,000 Capital/Measure A Right of Way Design 2026, construction early 2027Main Library Renovations 2,175,203 42,500,000 17,200,000 23,300,000 Capital/Measure J/Bond Construction to begin 2026, completion late 2027Gene Autry Wind Wall 143,803 3,280,694 2,600,000 - Measure A Construction to begin 2026, completion late 2026Demuth Dog Park 506,520 7,413,131 3,000,000 5,000,000 Capital/Quimby/Measure J Expect bid 2026, expected completion late 2027Pickleball Courts 253,495 6,050,000 3,000,000 2,796,505 Quimby/Measure J Expect bid 2026, expected completion late 2027Annual Paving Rehabilitation 7,903,650 18,000,000 8,500,000 9,500,000 Measure J Ongoing annual projectSwim Center Upgrades - 7,650,000 4,650,000 3,000,000 Measure J Under design 2026, construction to begin 2027Top Projects•Main Library Renovations – Complete restoration of the Main Library located at Sunrise Park and is currently out to bid. Expected to be awarded sometime in July 2025 and will be financed by debt.•Demuth Dog Park – Construction of a small and large dog park, including additional drink stations, new restrooms, with drainage improvements.•Annual Paving – Paving of local and arterial roads.•Swim Center Upgrades – Remodel the existing interior, exterior, rood and add ADA accessible ramps.
City of Palm SpringsProposed Budget FY 26&27 – CAPITAL PROJECTSAll Wastewater Treatment Plant (WWTP) projects will be funded by the WWTP fund.•WWTP SCADA Improvements – SCADA (Supervisory Control and Data Acquisition) collects real-time data from field devices to monitor the process, adjust remotely and to collect water quality•WWTP Upgrade Lift Stations – Upgrade electrical, structural and meter flow systems to four of the City sewers lift stations.•WWTP Digestor No. 1 Replacement – Full replacement of the existing Digestor No. 1 and replace it with a new covered structure compliant with current seismic and building codesProject Name Total BudgetFY 2026 BudgetFY 2027 BudgetStatusWWTP Scada Improvements 8,700,000 4,350,000 4,350,000 Under design 2026, expected construction to begin 2027WWTP Upgrade Lift Stations 11,600,000 5,800,000 5,800,000 Under design 2026, expected construction to begin 2027WWTP Digester No. 1 Replacement 14,500,000 7,250,000 7,250,000 Under design 2026, expected construction to begin 2027WasteWater Treatment Plant
City of Palm SpringsProposed Budget FY 26&27 – CAPITAL PROJECTS• Staff has identified over 25 deferred maintenance projects with an estimated value of $10 million over the two-year budget cycle.• Projects span over multiple city facilities and departments focusing on infrastructure improvements, equipment upgrades, and facility modernization.Fiscal Year 2025-26 Fleet & Deferred Maintenance FundsFundBeg Fund Balance Revenue Transfer In Expenditures Transfer OutEnding Fund BalanceFacilities Maintenance 17,425,843 9,903,446 - 15,723,049 - 11,606,240 Motor Vehicle 11,163,734 7,707,217 - 11,508,884 - 7,362,067 Total 28,589,577 17,610,663 - 27,231,933 - 18,968,307 Fiscal Year 2026-27 Fleet & Deferred Maintenance FundsFundBeg Fund Balance Revenue Transfer In Expenditures Transfer OutEnding Fund BalanceFacilities Maintenance 11,606,240 10,128,376 - 13,933,491 - 7,801,125 Motor Vehicle 7,362,067 7,156,496 - 12,022,584 - 2,495,979 Total 18,968,307 17,284,872 - 25,956,075 - 10,297,103
City of Palm SpringsProposed Budget FY 26&27 – DEFERRED MAINTENANCE PROJECTSDeferred Maintenance ProjectsFY2026 & FY2027• Total estimate of $10 million over next 2 years• Total estimate of $2.7 million spend in Public Safety over next two years
City of Palm SpringsProposed Budget FY 26&27 – MOTOR VEHICLE REPLACEMENTSMotor Vehicles FY2026 & FY2027• Replacement of 42 vehicles & 7 additions valuated at $8.4 over 2 years• $3.5 million in Public Safety vehicles, includes $2 million for 2 new fire trucks
City of Palm SpringsProposed Budget FY 26&27 – CAPITAL PROJECTS•Fire Station #3 (Schematic Design Only) – Design and site survey in preparation for the renovation and expansion of the historic fire station. Expected to combine Fire Station #1 into debt issuance•Belardo/Baristo Parking Structure Safety Study – Comprehensive assessment of two aging parking structures, including infrastructure integrity, lighting &general safety•Firearms Training Facility – Renovation of the current Palm Springs Police facility to enhance safety features to support continued interagency useTotal FY26 FY27Project Name Budget Budget Budget Funding Source StatusFire Station #3 (Schematic Design Only) 100,000 100,000 - Deferred Maintenance Expect to complete 2026Firearms Training Facility 3,000,000 1,200,000 1,800,000 Deferred Maintenance/Safety Aug Expect complete 2027Belardo/Baristo Parking Structure Safety Study 1,218,000 1,218,000 - Deferred Maintenance Expect to complete 2026Fire Station 5 - Space Planning Renovation 750,000 750,000 - Deferred Maintenance Expect to complete 2026Playground (Desert Highland Park)800,000 800,000 - Deferred Maintenance Expect to complete 2026Realtime Crime Center Buildout Prep 200,000 200,000 Deferred Maintenance Expect complete 202722 Police Vehicles 1,590,000 795,000 795,000 Fleet Service Expect complete 20271 Fire Truck (Pumper) 1,200,000 1,200,000 - Fleet Service/CFD Public Safety Expected delivery 20261 Fire Truck (Pumper) 1,200,000 1,200,000 - Fleet Service Expected delivery 2026Top Deferred Maintenance Projects and Vehicle Replacements
City of Palm SpringsA I R P O R T
HighlightsPassenger Counts have more than Doubled since FY 2019March 2025 – Highest Month Ever – Over 490,000 total Passengers YTD Passenger growth has exceeded prior year numbers28City of Palm SpringsProposed Budget FY 26&27 – AIRPORT
City of Palm SpringsProposed Budget FY 26&27 – AIRPORT
City of Palm SpringsProposed Budget FY 26&27 – AIRPORTRevenue Highlights:• First time ever to surpass $100M because of grant revenue to pay for the Baggage Handling System• Key sources of revenue –Rental Car Fees, Airline Fees and Parking Fees are steady with slight increases
City of Palm SpringsProposed Budget FY 26&27 – AIRPORTRevenue Highlights:• Grant revenue shows dramatic growth, surging to $32M by FY27 after a significant FY24 dip.• Rental car fees remain the largest stable revenue source, growing from $15M to $24M (FY22-27).• Most other revenue streams show modest but steady growth, maintaining consistent airport income.
City of Palm SpringsProposed Budget FY 26&27 – AIRPORTRevenue Highlights:• Non-Aeronautical Revenues include public parking fees, rental car fees and concessions• Represent 67% of revenue• Aeronautical Revenues includes airline landing fees, gate fees and terminal fees. • Represents 33% of revenues
City of Palm SpringsProposed Budget FY 26&27 – AIRPORT FUNDExpense Highlights:• Increase in Salaries & Benefits for all Departments• Capital and Project expenditures are increasing significantly, combination of airport-funded and federally-funded projects
City of Palm SpringsProposed Budget FY 26&27 – AIRPORT FUND
City of Palm SpringsProposed Budget FY 26&27 – AIRPORT FUNDTrend Airport Expenses:• Salaries & Benefits increase by 15% from FY24-25 to FY25-26• Grants Expense -$46m for FY25-26; $72m for FY26-27
City of Palm SpringsProposed Budget FY 26&27 – AIRPORT FUNDTrend Airport Positions:•Passenger trends align with staff increases•Proposing 6 new positions for FY 2025-26
City of Palm SpringsProposed Budget FY 26&27 – AIRPORT FUND• Escalators, Baggage Handling System and Terminal Restrooms are the airports major projects over the next two fiscal years. • The airport has procured 40 level 2 charging stations but has been coordinating with SCE on the easements. Installation of the chargers will happen this CY.
City of Palm SpringsBUDGET STUDY SESSION