11. MID-YEAR BUDGET UPDATE FOR FISCAL YEAR 2025-2026 The General Fund operating revenues are projected to be $3.7 million higher than the adopted budget and General Fund operating expenditures are projected to be $0.5 million lower than the adopted budget. This results in a $0.6 million operating surplus as opposed to the $3.5 million operating deficit projected at the time the budget was originally adopted in June. This report offers two budget options for the General Fund and Land Sale Proceeds funds. At June 30, 2026, budget option 1 retains supplemental Land Sale Proceeds funds for a General Fund Reserve level of $31 million or 29% of General Fund operating expenditures. Given the projected change from an operating deficit to an operating surplus, staff recommends Budget option 2, which returns supplemental Land Sale Proceeds funds and still maintains the General Fund's reserves at $26 million or 24% of General Fund operating expenditure. - City of Tustin, CA

Meeting: Regular Meeting of the City Council/Special Closed Session-5:30 pm/Regular Meeting-6:00 pm

Meeting Time: February 17, 2026 at 6:00pm PST

Agenda Item

11. MID-YEAR BUDGET UPDATE FOR FISCAL YEAR 2025-2026 The General Fund operating revenues are projected to be $3.7 million higher than the adopted budget and General Fund operating expenditures are projected to be $0.5 million lower than the adopted budget. This results in a $0.6 million operating surplus as opposed to the $3.5 million operating deficit projected at the time the budget was originally adopted in June. This report offers two budget options for the General Fund and Land Sale Proceeds funds. At June 30, 2026, budget option 1 retains supplemental Land Sale Proceeds funds for a General Fund Reserve level of $31 million or 29% of General Fund operating expenditures. Given the projected change from an operating deficit to an operating surplus, staff recommends Budget option 2, which returns supplemental Land Sale Proceeds funds and still maintains the General Fund's reserves at $26 million or 24% of General Fund operating expenditure.