TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: FEBRUARY 24, 2026
Reviewed by:
City Manager: AP
SUBJECT:
Title
2025-26 MID-YEAR BUDGET REPORT
Body
SUMMARY
This mid-year budget report for 2025-26 covers the six-month period ending December 31, 2025. It provides a status update on the City’s primary revenue and expenditure sources in its major funds, with a focus on the General Fund.
Staff closely monitors the City’s budget to ensure that current year revenues and expenditures are meeting expectations, which is necessary to maintain budget stability and avoid service disruptions in any given year.
Through the first half of the year, City funds are generally performing within expected 2025-26 budgeted levels. The City has received sufficient revenues to suggest that full-year budgetary estimates are realistic and that the City is on track to meet or exceed those full-year projections. Expenditures through December 31, 2025 are generally in line with expectations of fifty percent of full-year expenditures that could be reasonably expected at the midpoint of the fiscal year. At this point, staff expects that full-year expenditures will remain within budgeted constraints by the end of the fiscal year. Staff will continue to monitor expenditures through the remainder of the fiscal year for any adjustments in appropriations if necessary.
Results for the City’s General Fund, as well as the other major fund categories, are presented in more detail in the remainder of this report.
RECOMMENDATION
Recommended Action
Staff recommends the City Council receive and file the 2025-26 Mid-Year Budget Report.
Body
ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there is the following alternative:
• Request additional information.
FINANCIAL REVIEW
Financial data through December 31, 2025, indicate that for the full year, revenues are likely to meet or exceed budgetary estimates and that expenditures are generally expected to remain within the constraints of the budget. Any significant variances from the budget are discussed further in this report.
The staff cost to prepare this report is estimated at $1,840 and is included in the operating budget of the Financial Services Department.
ANALYSIS
The information in this report represents a snapshot of City revenues and expenditures as of December 31, 2025, and is the most accurate and up-to-date information available at the time of publication. This information may not represent pending payments or revenues, or irregularities in payment or revenue timing. The City monitors and adjusts its revenue and expenditure projections based on fiscal year-to-date performance and other developments to develop a more accurate picture of the City’s anticipated year-end financial position. If a significant change is anticipated, budget adjustments will be recommended during the fiscal year.
The City Council adopted an operating and capital improvement budget for 2025-26 that included $67,392,990 in revenues and transfers in from other funds. Subsequent amendments have been made to the budget to account for revenues and transfers in, resulting in an adjusted total revenue budget of $69,968,530.
The revenue budget amendments included $2,441,244 in transfers to the Capital Projects Fund from General Fund reserves to fund costs related to the Police Department women’s locker room project, $79,296 in transfers to the Landscape & Lighting District (LLD) Fund from General Fund reserves to fund costs related to janitorial services for our park restrooms, and $55,000 for grant revenues awarded to the General Fund. These revenues are offset by costs related to these projects and services.
This total revenue budget is spread across a number of fund categories, representing more than thirty distinct funds used to account for a wide variety of programs and activities. Total revenues by fund category are shown in the table below:
Through December 31, 2025, $28,086,242 in total revenues and transfers in had been received, representing 40.14% of the full-year budget. This figure is in line with typical revenue receipts for the first six months of the fiscal year when compared to prior fiscal years.
Total expenditures and transfers out to other funds reflected in the original adopted budget amounted to $67,859,996. Subsequent amendments to the budget for capital projects, equipment acquisitions, grants, and carryover of unspent funds from prior year projects have resulted in an adjusted total budget of $100,934,383.
The expenditure budget amendments by fund type are explained in the following paragraphs.
General Fund
Adjustments to the General Fund budget included $556,469 for the carryover of funds encumbered in the prior year for a variety of projects and programs. Additional appropriations of $1,063,563 were approved by the City Council through the second quarter. These appropriations included $550,000 for professional building division services, $200,000 for special legal services, $194,000 for staffing changes in the Community Development Department, and the remaining $119,563 for increased costs associated with traffic signal maintenance, animal control services, copier leases, and janitorial contracted services. Another $1,500,000 was appropriated from 2024-25 surplus funds to reduce pension liabilities with an additional discretionary payment to CalPERS and a contribution to the City’s Section 115 Pension Trust. The remaining $2,530,631 is related to transfers from the General Fund to the Landscape and Lighting District (LLD) and Capital Projects Funds for appropriations listed below.
Special Revenue Funds
A total of $2,443,834 from the American Rescue Plan Act (ARPA) Fund was carried over from the prior year for obligated projects and programs that are allowed through the end of 2026. Capital improvement project budgets of $10,117,098 were carried over from various funds for projects that are planned but have not yet been completed. The adjusted budget also includes $648,283 for funds encumbered in the prior year for items such as $78,580 for a signage plan and parking lot study for the Claremont Hills Wilderness Park and our urban parks, $452,024 for professional engineering services, $41,670 for park custodial services and sports park lighting maintenance, and $76,009 for other professional or consulting services. Additional appropriations in the amount of $1,123,558 were approved by the City Council through the second quarter. These appropriations included $109,450 for design services for Claremont Boulevard improvements, $331,086 for Arrow Highway transit improvements, $42,697 for improvements to various bus stops, $541,029 for contracted services related to the Police Department women’s locker room, $79,296 for increased custodial costs for our park restrooms, and $20,000 for conceptual design services for Larkin Park.
Capital Projects Funds
Budget carryovers from the prior year included $3,029,743 for various ongoing capital projects which included $845,785 for Arrow Highway undergrounding of utilities, $165,014 for various park and facility projects and $2,018,944 for the energy conservation improvements. Additional appropriations of $2,441,243 were approved by the City Council through the second quarter which included $2,237,964 for the Police Department women’s locker room and $203,280 for the Garner House roof replacement projects.
Enterprise Funds
Budget carryovers from the prior year included $5,687,807 for various ongoing capital projects which included $896,910 for bus stop improvements, $807,080 for sewer system assessments and repairs, $2,257,369 for fleet vehicles ordered but not delivered, and $1,726,448 for cemetery expansion and related projects. Additional appropriations of $150,120 were approved by the City Council through the second quarter for contracted services related to landfill airspace with San Bernardino County, custodial services for the cemetery, and general refuse service contracts.
Internal Service Funds
Budget carryovers from the prior year included $1,439,958 for fleet vehicle replacements and $341,869 in encumbrances appropriated for the ERP financial system implementation.
Expenditures through December 31, 2025 totaled $32,703,749 or 32.40% of the full-year budget. Given the current status of expenditures, it is expected that the City will remain within the constraints of the current budget.
The table below shows total expenditures and transfers out to other funds as of December 31, 2025:
General Fund
General Fund revenues and transfers in for 2025-26 were originally budgeted at $36,610,105. The Adjusted Budget includes the addition of grant funds totaling $55,000, reported under Miscellaneous Revenues, which are one-time in nature.
At December 31, 2025, $14,353,329 of budgeted revenues had been received, representing 39.15% of the full-year budget. This is typical for General Fund revenues as most of the major sources of revenue are received in the latter part of the fiscal year. At the same point in 2024-25, $12,659,764 in General Fund revenues had been received, which amounted to approximately 34.73% of 2024-25 full-year revenues.
The table below shows 2025-26 General Fund revenues and transfers in as of December 31, 2025:
The major General Fund revenues, and their budgetary highlights as of December 31, 2025, are as follows:
Property Tax - To date, $3,042,256 in property tax revenues have been received from Los Angeles County, representing approximately 22.47% of the full-year budget. At the same time last year, approximately 21.54% of full-year actual revenues were received by December 31.
Sales Tax - Sales tax revenues received through the second quarter of the fiscal year amounted to $3,608,324. These represent collections for less than six months due to a general lag in receipts of sales tax from the County. In the prior year, $2,938,224 in sales tax revenue had been received by the midpoint of the fiscal year. The percentage increase over the prior year amounts to approximately 22.81%.
Transient Occupancy Tax (TOT) - TOT revenues through December 31, 2025 were $561,220 compared with $575,489 through the second quarter of 2024-25. This represents a decrease of $14,269 compared to the prior year. The revenues collected continue to be in line with the amount budgeted for the year.
Business License Tax - With revenues of $435,017 in the first half of this fiscal year, business license tax revenues are $41,012 or 10.41% higher than at the same point in last fiscal year. Typically only 33% of the annual business license tax is collected in the first six months of the fiscal year with the majority collected in the spring. Staff estimates that based on trends, the amount collected to date is in line with the amount budgeted for the year.
Utility User Tax (UUT) - At December 31, 2025, UUT revenues totaled $2,625,139. Through the second quarter of 2024-25, these revenues totaled $2,502,517. Revenues reflect an increase of approximately 4.90% over the same period in the prior year, which were primarily due increased utility rates for electricity, gas, and water services.
Other Taxes - Other taxes include franchise fees and property transfer taxes. Through December 31, 2025, these revenues amounted to $225,597, representing 21.01% of the full-year budget. At the same point in the prior fiscal year, $192,433 in revenues had been received. Much of this revenue comes from franchise taxes paid by utility companies, which is typically received in the latter part of the fiscal year.
Licenses and Permits - Revenues from public works, grading, and building permits totaled $1,499,790 at December 31, 2025. Current year revenues reflect an increase of $543,951 in revenues when compared to $955,839 for the same period in the prior year. These revenues fluctuate based on the level of growth in residential and College development. Staff recognizes that based on revenues received in the first two quarters, that we have already exceeded the full-year budget.
Fines and Forfeitures - Revenues from parking, traffic, and code enforcement citations amounted to $232,983 at December 31, 2025. At the same point in the prior year, revenues totaled $321,835. Current year revenues reflect a decrease over the prior year of 27.61%. This decrease is due to decreased collections of code enforcement citations amounting to $56,300 over the prior year for the same period and decreased collections of parking citations amounting to $8,764 over the prior year for the same period.
Charges for Services - Revenues through the end of the second quarter totaled $893,669, compared with prior year revenues for the same period of $771,801. Staff estimates that based on trends, the amount collected to date is in line with the amount budgeted for the year.
General Fund expenditures and transfers out for 2025-26 were originally budgeted at $36,607,210. The adjusted budget of $42,257,873 represents amendments to the budget for carryover of funds from the prior year for projects that were not completed and additional appropriations approved by the City Council through the second quarter. This increase of $5,650,663 is comprised of $556,469 for carryover of funds encumbered in the prior year, $1,063,563 for appropriations approved by the City Council through the second quarter, $1,500,000 that was appropriated from 2024-25 surplus funds to reduce pension liabilities with CalPERS and a contribution to the City’s Section 115 Pension Trust, and for transfers from the General Fund of $2,530,631 to the LLD Fund and Capital Projects Fund. These items were also described in more detail earlier in this report.
The table below shows 2025-26 General Fund expenditures and transfers out as of December 31, 2025:
At December 31, 2025, the total General Fund expenditures and transfers out amounted to
$19,477,363 or 46.09% of the adjusted budget for the year. Given that one would reasonably expect 50% of the budget to have been expended at this point in the fiscal year, results to date show that the City should remain within budgetary constraints. Staff will review General Fund expenditures in the third quarter of this fiscal year to recommend budget adjustments if necessary.
Of the City’s operating departments, General Services has expended 87.72% of its budget for the second quarter. This was primarily due to the full annual payment in July of approximately $4.35 million towards the City’s general liability, workers’ compensation, earthquake and property insurance deposits for the year. These costs are distributed throughout the year to the City’s operating departments, and it is expected that by the end of the fiscal year, General Services’ expenditures will be in line with the budget. Additionally, Community Services has expended 63.99% of its budget for the second quarter. This was primarily due to increased utility costs and increased contracted costs with custodial services for our City facilities and concrete cutting or repairs on City streets.
All other departments expended between 34.63% and 50.54% of their General Fund budgets through the second quarter of 2025-26. Given these year-to-date figures, General Fund expenditures appear likely to remain within budgeted amounts for these departments for the full-year.
Special Revenue Funds
Special Revenue Funds include those funds whose revenues are committed to specific purposes or projects. The City has twenty-three Special Revenue Funds that provide funding for a variety of activities, including supplemental public safety services, the operation of the City’s impound lot, street repairs and upgrades, transportation programs, landscaping and streetlight maintenance, the senior meal program, housing rehabilitation, and economic development.
Revenues for the City’s Special Revenue Funds totaled $5,481,101 compared with a full-year adjusted budget of $12,548,965. Receipts through December 31, 2025 represent 43.68% of the budget for the full year.
Expenditures for the Special Revenue Funds total $4,196,870 against a full-year adjusted budget of $26,160,832. These figures represent 16.04% of the 2025-26 budget expended through December 31, 2025. The budget for the Special Revenue Funds was increased from the original adopted budget of $11,828,059 to $26,160,832 due to carryovers for contributions related to unspent capital project budgets from prior fiscal year and allocations of ARPA funds approved by the City Council. Other major special revenue funds that contributed to the increase in adjusted budget included State Gas Tax (resurfacing of non-residential streets), Measure R (sidewalk mitigation and damaged pavement repairs), Drainage Fund, and Park Dedication Fund (improvements to city parks). Special Revenue Funds’ expenditures through December 31 indicate that they will not exceed budgetary constraints by the end of the year.
Capital Projects Funds
Capital Projects Funds are restricted in use to the funding of general capital projects not part of Special Revenue Funds. The City has three active capital projects funds.
Revenues to date in the City’s Capital Projects Funds totaled $440,563 at December 31, 2025. These revenues represent 14.14% of the full-year adjusted budget of $3,115,244.
The expenditure adjusted budget for Capital Project Funds, amounts to $6,026,986 and is higher than the original budget of $556,000 mostly due to the carryover of unspent budget and allocations approved by the City Council in the amount of $2.0 million for the energy efficiency project, $2.3 million for the improvements to the facilities at the Police Department and Garner House roof replacement, and $0.85 million for the undergrounding of utilities on Arrow Hwy. Expenditures in the Capital Projects Funds stand at $1,116,030 as of December 31, 2025. This represents 18.52% of the full-year budget. It is anticipated that the Capital Projects Funds expenditures will end the year within the constraints of the current budget.
Enterprise Funds
The City operates four Enterprise Funds to provide transportation, sewer, sanitation, and cemetery services. The activities of these funds are intended to be supported solely by revenues from fees charged for services provided.
At December 31, 2025, the City’s Enterprise Funds had generated revenues of $5,961,097 versus estimated revenues for 2025-26 of $11,844,774. These revenues represent 50.33% of full-year budgeted revenues for the year. All the City’s Enterprise Funds are on track to meet budgetary revenue estimates by the end of the fiscal year.
Expenditures in the Enterprise Funds stand at $5,546,436 as of December 31, 2025. This represents 29.50% of the full-year adjusted budget of $18,802,220. Given year-to-date expenditures, it is anticipated that the Enterprise Fund expenditures will end the year within the constraints of the current budget.
Internal Service Funds
The City’s Internal Service Funds provide motor fleet and technology services to support the City’s operating departments. Revenues for Internal Service Funds come from fees charged internally to each department for services provided.
At December 31, 2025, Internal Service Fund revenues totaled $1,844,703 out of a total revenue budget of $3,866,498. This amounted to 47.71% of the full-year budget.
Expenditures through the end of the second quarter of the fiscal year totaled $1,799,784, representing 31.26% of the full-year budget of $5,758,316. Internal Service Fund expenditures are expected to remain within budgeted amounts for the full-year.
Debt Service/Successor Agency Funds
In addition to the funds already discussed, the City also operates a Debt Service Fund and a Successor Agency Fund. The Debt Service Fund, as its name suggests, is used to account for the expenditure of funds to make payments on outstanding debt obligations of the City. The Successor Agency Fund was established in the wake of the dissolution of redevelopment agencies in California to begin the wind down of the affairs of the former Claremont Redevelopment Agency.
Revenues in the Debt Service/Successor Agency Funds amounted to $5,449 at December 31, 2025, representing 0.28% of the full-year budget of $1,927,944. The bulk of the revenues in the Successor Agency/Debt Service Funds come from property tax remittances received in January and June of each fiscal year, and transfers in processed at the end of the fiscal year.
Expenditures totaled $567,264 out of a budgeted $1,928,156, representing 29.42% of the full-year budget. It is anticipated that the Debt Service Fund expenditures will end the year within the constraints of the current budget.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: General Plan and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director