The City Council on April 9 received and filed a mid-year 2025-26 budget update from Seal Beach’s finance director. (The Sun will go into details about the budget workshop on the city’s improvement projects in next week’s paper.)
To summarize: The report says General Fund revenues are meeting or exceeding expectations. Revenues are exceeding expectations. However, sales tax revenues are below expectations. There is uncertainty about the economy, U.S. policy, and the Iran war, according to the same staff report.
Technically, this was a Consent Calendar item. The council unanimously approved this report with several other items. However, the council and public heard a budget presentation at the start of the regular meeting as well as a detailed discussion of the city’s improvement projects during a special 5 p.m. workshop earlier on the same day.
“Overall, Seal Beach’s financial position at mid-year remains stable, with revenues generally meeting expectations and expenditures controlled across departments,” according to the staff report.
The review was based on actual numbers from July 1 to Dec. 31, 2025.
The update was part of the regular council meeting, which started at 7 p.m. this Monday.
Background
The following are highlights from the report.
“The economy continues to experience volatility, with inflation moderating but remaining elevated and uncertainty surrounding U.S. economic policy affecting local financial conditions,” according to the staff report by Finance Director/City Treasurer Barbara Arenado.
“In addition, geopolitical instability, including the ongoing conflict involving Iran, has contributed to rising energy costs and increased market uncertainty with no clear timeline for resolution. Gasoline prices in California have recently exceeded $6 per gallon in some areas, increasing operating costs for residents, businesses, and City services. These factors may impact revenues, expenditures, and overall budget performance,” Arenado wrote. It is too early to know the full impact of these things, according to her report.
“Property tax revenues are tracking at or slightly above budgeted levels at midyear, reflecting increased assessed valuations and the timing of receipts,” she wrote
“In contrast, sales tax revenues are trending below prior-year levels and budget expectations, reflecting softer activity in business-industry purchases, cautious consumer spending, and pressures in retail and restaurant sectors,” Arenado wrote.
“Transient Occupancy Tax (TOT) revenues remain steady, with the City’s three hotels near capacity. Additionally, the implementation of SB 346 will improve monitoring of short-term rentals, supporting compliance and helping to protect TOT revenues. Overall, major General Fund revenues are meeting or modestly exceeding midyear expectations, with certain categories, such as Charges for Services, performing above budget,” Arenado wrote.
“Overall, major General Fund revenues are meeting or modestly exceeding mid-year expectations, with certain categories, such as Charges for Services, performing above budget,” Arenado wrote.
“On the expenditure side, salaries, benefits, and retirement costs are generally trending at budget. The City continues to prioritize filling vacant positions, particularly in public safety, and has seen strong participation in seasonal lifeguard positions to support beach operations,” Arenado wrote.
“Maintenance and Operations expenditures, including major contracts for refuse, insurance, and street maintenance, are anticipated to remain at or near budget, while legal fees have increased due to franchise matters, land use issues, public records requests, and other legal needs, prompting a proposed mid-year increase funded from the General Fund balance,” Arenado wrote.
“The City is continuing negotiations with the bargaining units and further adjustments may be necessary in the FY 2025-26 Budget. When those updates are available, staff will bring forth to the City Council for approval,” Arenado wrote.
Legal budget increases
“The first eight months of the fiscal year have been atypical which has generated a higher-than-anticipated demand for legal services. The increases are primarily due to complex land matters, franchise issues, water and sewer rate work, public records requests, and other specialized legal matters and general liability,” Arenado wrote.
“As a result, an increase to the legal and general liability services budget is necessary to accommodate these unanticipated needs for the remainder of the fiscal year,” Arenado wrote.
Fire budget increases
“During budget adoption the City received an updated contract charge for fire services. As a result, the adopted budget did not reflect the revised cost. This midyear adjustment is necessary to fund the increased contract amount and ensure adequate coverage for fire services for the remainder of the current fiscal year,” Arenado wrote.
Council Chamber upgrades
“The City Council approved Chamber viewing upgrades. As the City makes improvements within SBTV to upgrade the production of Council Meetings and other boards and commissions it is the goal to have continuity and upgrade the devices used in Council Chambers to monitor the council meetings. The current devices being used by the City are inadequate and no longer offer software upgrades. Staff would like to integrate new devices and device peripherals simultaneously with already approved planned upgrades,” Arenado wrote.
