Dana Point committee hears two‑year budget plan projecting modest surpluses before transfers

The Finance Financial Review Committee on April 25, 2023 received a presentation of the proposed two‑year operating budget and long‑term financial plan for fiscal years 2023–24 and 2024–25.

Staff told the committee the city is estimating general fund revenues of about $46.5 million in fiscal year 2024 and $47.9 million in fiscal year 2025, with pre‑transfer surpluses of roughly $3.4 million in FY24 and $3.8 million in FY25. "We're estimating 46.5 in fiscal year 24 and 47,900,000.0 in fiscal year 25," a staff presenter said during the briefing.

The nut grafl: The presentation outlined revenue assumptions (transient occupancy tax, property tax, sales tax and charges for services), the two largest expense categories (personnel and police services), and an expected shift of one‑time funds to capital and facility improvements. Staff said the city's reserve policy targets would be met: an economic stability reserve at 11% of operating revenue and an extreme event reserve at 9%.

Supporting details: Staff attributed the FY23 revenue strength primarily to transient occupancy tax (TOT) and saw elevated assessed values from prior home‑sale activity, noting assessed value growth used in the budget calculation. Staff projected TOT at about $15.6 million for FY24 and $16 million for FY25 and cautioned that a modest downturn in travel and meetings bookings informed conservative estimates.

On expenditures, staff flagged a one‑time $2.1 million payment to CalPERS in the prior year as a driver of year‑over‑year increases, and identified the Orange County Sheriff Department contract and personnel costs as the two largest ongoing expenses. "The police services budget for fiscal year 24 is $15,000,000. We have no change in our current service level with the Orange County Sheriff Department," staff said.

Capital and reserves: The proposed budget includes transfers to the CIP (two‑year net CIP investment of about $19.6 million) and set‑asides for a general plan update (staff estimated the next phase could cost more than $700,000). Staff described top CIP priorities as citywide storm drain repairs, water‑quality diversion repairs and traffic safety projects, and noted a facilities improvement program to address deferred maintenance such as City Hall roof replacements.

Process and next steps: Staff said the proposed budget will be presented at a city council budget workshop the following week, continued to a second May meeting, with final adoption expected in the first June meeting. The committee received the presentation and later approved the related item by roll call.

Ending: The committee did not adopt the budget at this meeting; staff returns to the council and the committee with additional materials and a rollover report in September as the council considers adoption.