FROM:
Finance
SUBJECT:
Title
Fiscal Year 2026/27 Supplemental Budget Report - City of Fontana
End
RECOMMENDATION:
Recommendation
1. Approve the recommended Fiscal Year 2026/27 Supplemental Budget adjustments
2. Adopt Resolution No. 2026-052, of the City Council of the City of Fontana establishing a General Fund Appropriations limit of $419,975,336 pursuant to Article XIII (B) of the California Constitution for Fiscal Year 2026/2027.
3. Authorize the carryforward of available budget at fiscal yearend to the following fiscal year for all capital improvement projects and one-time funded initiative, and adjust supplemental fund balances.
4. Adopt Resolution No. 2026-053, of the City Council of the City of Fontana reassigning the Purchasing Specialist Classification to the Teamsters Local 1932 City Hall Unit, and approving the updated salary table for the Executive Employees, Fontana Police Benefit Association, Fontana Police Officers’ Association, Fontana Police Management Association, Management/Confidential Employees, Teamsters Local 1932 City Hall Unit, Teamsters Local 1932 Public Works Unit for Fiscal Year 2026/2027.
5. Approve the recommended Fiscal Year 2026/2027 Hourly Billing Rate Schedule.
End
COUNCIL GOALS:
• Operate in a businesslike manner by ensuring that the public debate is based on accurate information.
• Practice sound fiscal management by producing timely and accurate financial information.
• Practice sound fiscal management by living within our means while investing in the future.
• Practice sound fiscal management by fully funding liabilities and reserves.
• Practice sound fiscal management by developing long-term funding and debt management plans.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by maintaining and improving the city's existing infrastructure.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by providing for the development of new infrastructure.
DISCUSSION:
The City’s budget is an important policy document, serving as the annual financial plan that identifies the spending priorities for the organization. The budget is used to balance available resources with community needs, as determined by the City Council. The City's fiscal priorities include keeping the City safe, clean, and well maintained, in addition to protecting the quality of life and property values. The budget also serves as a tool for communicating the City's financial strategies and for ensuring accountability.
On June 10, 2025, the City Council adopted the two-year operating budget for Fiscal Years 2025/26 and 2026/27. As adopted, the Fiscal Year 2026/27 Operating Budget includes total uses (expenditures and transfers out) for all City funds of $396.0 million and total sources (revenues and transfers in) of $428.5 million. The Recommended Budget includes an increase in total sources of $12.0 million for a total of $440.4 million and an increase in total uses of $28.1 million for a total of $424.0 million.
2026/27 Budget
All City Funds
GENERAL FUND
As adopted, the Fiscal Year 2026/27 General Fund Operating Budget includes total uses of $213.4 million and total sources of $217.4 million. The Recommended Budget includes an increase in total sources of $5.9 million for a total of $223.3 million and an increase in total uses of $9.1 million for a total of $222.5 million.
2026/27 Budget
General Fund (Fund 101)
Notable Changes
• Revenues have been increased by a net $9.4 million primarily due to:
o Transaction Use Tax - increase of $4.1 million based on current year trends and overall performance exceeding initial forecasts.
o Property Tax - increase of $1.7 million due to current year actuals exceeding initial forecasted revenue as a result of continued assessed valuation growth.
o Interest and Rentals - increase of $1.4 million due to the strong performance of the City’s investment pool.
o Other Revenues - increase of $1.9 million due to a change in accounting methodology regarding the recording of other non-general funds cost allocation contributions.
o From Other Agencies - increase of $1.7 million due to an increase in contributions from the Fire Protection District for overhead cost allocation.
These increases are offset by decreased sales tax projections ($1.4 million).
• Expenditures have been increased by $7.3 million primarily due:
o Personnel expenses related to labor negotiations and classification actions of $4.8 million.
o Risk liability increase of $1.0 million.
o Materials and supplies increase of $0.6 million.
o Contractual services increase of $0.3 million.
Fund Balance Analysis
The proposed Contingency Reserve for the Fiscal Year 2026/27 Recommended Budget is $43.5 million, an increase of $3.5 million from the adopted reserve. The PERS Rate Stability reserve has increased to $14.4 million while the Reserved Inventories have decreased to $340,263 and Future Commitments have decreased to $1.6 million due to Fiscal Year 2025/26 operations.
2026/27 Budget
General Fund Balance
OTHER GENERAL FUNDS
Other General Funds includes a total of 10 funds which are funded by the General Fund for services that support the City’s general operations. The most notable funds include City Technology, Facility Maintenance, KFON, Self-Insurance, Retiree Medical Benefits, and General fund Operating Projects.
As adopted, the Fiscal Year 2026/27 Other General Funds Operating Budget includes total uses of $34.4 million and total sources of $40.4 million. The Recommended Budget includes an increase in total sources of $2.6 million for a total of $43.0 million and an increase in total uses of $9.3 million for a total of $43.7 million.
2026/27 Budget
Other General Funds
Notable Changes
• City Technology - increase in appropriations of $376,550 primarily due to increased software maintenance, subscriptions and operating expenses.
• Self-Insurance - increase in appropriations of $1.6 million primarily due to increases in general risk and workers compensation premiums.
• Lease-Fire - increase in transfers out of $7.0 million to the debt service fund (Fund #580) for the 2025 Lease Revenue Bonds debt service.
OTHER CITY FUNDS
Other City Funds includes a total of 194 funds which Special Revenue Funds,
Debt Service Funds, Capital Project Funds, Enterprise Funds, and Internal Service Funds.
As adopted, the Fiscal Year 2026/27 Other City Funds Operating Budget includes total uses of $148.2 million and total sources of $170.6 million. The Recommended Budget includes an increase in total sources of $3.5 million for a total of $174.1 million and an increase in total uses of $9.7 million for a total of $157.8 million.
2026/27 Budget
Other City Funds
Notable Changes
• Special Revenue Funds:
o Federal Seizure DOJ - increase in appropriations of $1.1 million primarily due to FLOCK camera software and CAD RMS consultant/software
o Various CFD Funds - increase in appropriations of $4.6 million in 105 different funds due to increases in operating expenses and an updated CFD expenditure budgeting methodology.
• Debt Service Fund - increase in appropriations of $7.0 million primarily due to the 2025 Lease Revenue Bond debt service.
ORGANIZATIONAL CHANGES
Included in the Fiscal Year 2026/27 Supplemental Budget report are organizational changes carried forward from Fiscal Year 2025/26 and new requests with the Supplemental Budget and are summarized at the departmental level below. The net impact of all new Supplemental Budget requests is $98,830 ($69,460 General Fund and $29,470 Other Funds).
• Development Services Admin - Other Funds increase of $29,360
o Reclassification of one (1) Grant Analyst to Senior Management Analyst
• Public Works & Engineering - General Fund increase of $69,460, Other Funds increase of $10
o Reclassification of one (1) Associate Engineer to Engineering Manager
FISCAL IMPACT:
The requested actions will impact City Funds as outlined in the Supplemental Budget Report.
MOTION:
Approve staff recommendation.