San Rafael Council accepts midyear budget update and authorizes credit-card fees; personnel changes approved

The San Rafael City Council voted March 2 to accept the FY25–26 midyear budget update, adopt supplemental appropriations totaling $569,085, authorize the city to assess credit-card processing fees in applicable transactions (capped at actual cost not to exceed 4%), and approve personnel classification and salary schedule adjustments related to traffic-engineering staffing and temporary/seasonal retiree minimum-wage updates.

Interim City Manager and Finance Director Navazio summarized results through Dec. 31: all-funds revenues recorded approximately $97.16 million (about 49% of the amended $198.4 million revenue budget) and expenditures/encumbrances of roughly $103.06 million. The finance presentation projected a potential year-end general-fund drawdown of about $1.3 million, largely driven by personnel costs that currently track about $2.7 million over budget in the general fund. Navazio told the council the city has instituted a hiring freeze for the current fiscal year, largely excluding sworn public-safety personnel.

On credit-card fees, Navazio explained that recent changes to state law allow local agencies to pass processing fees to payers and that the proposed resolution would authorize staff to recover actual processing costs up to a 4% cap where appropriate. “For fiscal year 24–25 the city incurred over $600,000 of credit card processing fees,” Navazio said, and staff said implementation could begin quickly in the new OpenGov permitting system while the city refines consistency across departments.

Councilmembers asked detailed questions about the overtime trend (noting a roughly $2 million overtime pressure driven mostly by public-safety backfill and increased paid leaves), vacancy-rate assumptions and how the credit-card fee would be applied and communicated to customers. Councilmember Bushey pressed for consistent application to avoid cross-subsidies, and Hill supported moving forward while urging ongoing refinement and greater clarity on implementation timing.

Council then took four separate motions: acceptance of the midyear report; adoption of the $569,085 supplemental appropriations; authorization for the city manager to apply credit-card processing fees (cap: actual cost not to exceed 4%); and adoption of personnel classification/salary updates. Each motion passed on roll call with the councilmembers present voting Aye.

Staff said most of the supplemental appropriations are offset by corresponding revenues and that approximately $140,000 would be covered from available fund balances across special funds; none of the appropriations require general-fund transfers. The council asked staff to continue developing a transparent implementation plan for the card-fee policy and to provide follow-up analysis on overtime drivers and vacancy assumptions ahead of next year's budget process.

The council recorded roll-call votes for the motions; staff will implement the approved actions and return with further details and any recommended refinements.