Clear Lake presents midyear budget adjustments, urges caution on new ongoing spending

City staff delivered a midyear budget presentation outlining national and state economic risks, the city’s near‑term revenue outlook and a set of recommended midyear appropriations. The presentation noted a projected swing in the state budget (cited from the Legislative Analyst’s Office) and said Clear Lake’s discretionary revenue remains sales‑tax dependent and has cooled after recent gains.

The city manager summarized the national picture and local implications, saying, "So are we in a recession or not? Everyone says no, but we will be in one at some point," and urged councilors to avoid committing to new ongoing expenses. The presentation stated the city’s general fund reserves are around 15% and gave a $1,625,000 figure for general fund reserves as context for fiscal flexibility.

Staff identified several midyear adjustments: $43,000 for community development consultant plan review, a personnel appropriation to cover missed health and life insurance costs, roughly $40,000 for police equipment and vehicle leases, $26,000 for vehicle fuel and overtime tied to services provided under contract, and $300,000 in Measure B loan funds for project design at Clear Lake Park. Finance staff also requested $50,000 for outside consulting to support audit preparation and transitional finance work and smaller appropriations for maintenance contracts, software and salaries.

Staff said about $138,000 in prior payments from Lake County (COPS/state law enforcement safety fund) and contract revenues from the city of Lakeport/contract partner would cover the police appropriations. On federal funds, staff said the city will require a single audit this year because Community Development Block Grant (CDBG) receipts pushed federal funding over the $750,000 threshold.

Councilors asked for clarification on pension liabilities and revenue projections. The manager pointed to CalPERS discount‑rate adjustments and market returns as drivers in employer cost increases and said the city’s tax consultant projects a largely flat revenue outlook for the coming quarters.

The council placed the budget resolution on the meeting’s consent agenda and adopted the consent agenda unanimously, which included the recommended budget resolution that carries the appropriations described above. The council meeting record shows the council intends to monitor revenue closely and retain reserves while using one‑time funds and special‑revenue streams to avoid layoffs.

Next steps: the midyear budget resolution was included in the consent agenda and was adopted by the council; staff will execute the appropriations and return any required follow‑up items (audit documents, project design contracts) to the council or committees as needed.