AGENDA TITLE:
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Receive Report and Adopt a Resolution Approving Fiscal Year 2025-26 Mid-Year Budget Adjustments; and Approving the Addition of One Police Officer, One Senior Billing Specialist, One Management Analyst - Confidential, and a Senior Plans Examiner; Deletion of One Customer Service Representative and One Health and Safety Specialist, and the Reclassification of a Deputy City Clerk to an Assistant City Clerk and Program Manager to a Recreation Manager; and Adopt Updates to the Budget and Fiscal Policy (IS - Budget)
MEETING DATE:
February 4, 2026
PREPARED BY:
Jennelle Baker, Budget Manager
recommendation
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RECOMMENDED ACTION:
Receive Report and Adopt a Resolution Approving Fiscal Year 2025-26 Mid-Year Budget adjustments; and approve the addition of one Police Officer, one Senior Billing Specialist, one Management Analyst - Confidential, and a Senior Plans Examiner; deletion of one Customer Service Representative and one Health and Safety Specialist, and the reclassification of a Deputy City Clerk to an Assistant City Clerk and Program Manager to a Recreation Manager; and adopt updates to the Budget and Fiscal Policy.
SUMMARY:
Each year, the City of Lodi prepares a Mid-Year Budget update recommending changes in appropriations to continue operations and projects during the year. The report below provides a summary of where we began the fiscal year with the adopted budget, discusses several revisions that were made and then provides detail about recommended changes. The recommended updates to the Fiscal Year 2025-26 Budget include updates to revenue estimates based on the best available information. There are several changes to expenditures that include new memorandum of understanding updates, internal investigation costs, expiration of the Assistance to Firefighters Grant, public safety overtime, and capital expenditures. Highlights include the addition of one Community Liaison Police Officer position in Police, one Recreation Manager in Parks, Recreation and Cultural Services (PRCS), and one Senior Plans Examiner in Community Development (CDD). The mid-year budget also includes the reclassification of the Deputy City Clerk to Assistant City Clerk in the City Clerk Division, the elimination of one Customer Service Representative and one Program Coordinator (PRCS) and addition of one Senior Billing Specialist in the Revenue Division.
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BACKGROUND INFORMATION:
The City Council adopted the Fiscal Year 2025-26 Budget on June 4, 2025 (Resolution 2025-121). The Budget sets the priorities for funding services within the City of Lodi for the fiscal year. The General Fund adopted Budget was balanced at $89,724,060, estimated revenue and expenses with a Citywide budget of $294,153,030 estimated revenue and $294,153,030 estimated expenses.
When the 2023-24 audit was finalized, the unrestricted fund balance as of June 30, 2024, was calculated at $10.7 million. Of this amount, $6.72 million is revenue from Peaker Plant rent recommended to be placed in a restricted fund. There is a remaining $4 million, and although the City Treasurer has the authority to redirect these funds to the Pension Trust, it is recommended to approve the adoption of the updated Budget & Fiscal Policy, setting a new Pension Stabilization funding balance status at 70% and assigning fund balance to the memorandum of understanding cost increases. The fiscal year 2024-25 audit is expected to be complete and presented to Council in the coming weeks.
After the adoption of the budget, several revisions are made in accordance with the approved Budget and Fiscal Policies. These adjustments are for items that are in progress from the previous fiscal year and need to “roll forward” for work to continue or other adjustments, including Council-approved adjustments that occur during the fiscal year.
The current fiscal year 2025-26 General Fund revised revenue budget is $94,990,231. This is due to three items. The first item is an increase of $5.1 million, consisting of carryover of remaining American Rescue Plan Act (ARPA) Capital revenue. The ARPA funds are one-time funds approved on March 2, 2022, (Resolution 2022-63). Remaining funds can be appropriated per the Budget and Fiscal Policies to automatically carry forward until project completion. The second item is an additional $64,000, representing an appropriation of a donation from the Lodi Fire Foundation (Resolution 2025-149 approved on September 3, 2025) for cardiac monitors, and finally a transfer in from Water and Wastewater in the amount of $16,666.67 for the professional recruitment costs related to the Public Works Director's retirement
The original and revised fiscal year General Fund 2025-26 revenue budget is shown below:
Table 1
The current revised expense budget is $95,349,328, an increase of approximately $5.6 million. The revisions consist of:
• Carryover of remaining American Rescue Plan Act (ARPA) Capital expense in the amount of $5,185,505. The ARPA funds are one-time funds approved on March 2, 2022 (Resolution 2022-63) and are allowed per the Budget and Fiscal Policies to automatically carry forward until project completion;
• Transfer out of $32,000 from the City Manager’s Office to Human Resources for the City Manager professional recruitment services expense;
• Carryover of $359,097 for the Assistance to Firefighters Grant award for paramedic training and overtime (Resolution 2023-02 approved on January 4, 2023);
• Appropriation of funds for a donation of $64,000 from the Lodi Fire Foundation in accordance of Resolution 2025-149 approved on September 3, 2025;
• Transfer in of $32,000 to Human Resources from the City Manager’s Office for the City Manager professional recruitment services expense, and the transfer of $25,000 to Human Resources from Public Works for professional recruitment services expense;
• Transfer out of $8,333 from Public Works to Human Resources for the Public Works Director's professional recruitment services expense.
The original and revised fiscal year 2025-26 expense budget is shown in Table 2 below:
Table 2
Mid-Year Budget
The mid-year budget is unique this year due to Memorandum of Understanding (MOU) negotiation delays that required salary and benefit best-guess assumptions during the FY 2025-26 planning. Now that most of the safety MOUs are finalized, and the other MOUs are currently in progress, budget staff recalculated these projections to align with the approved MOUs. Council will observe these updates in the mid-year expense review.
Mid-Year General Fund Revenues
General Fund revenues are currently estimated to come under the revised budget projection by $188,530, primarily due to the latest projections from HdL, the City’s sales tax consultant, indicating a decrease of $1 million in sales tax revenue compared to the 2024 fourth quarter HdL projection originally used for budget adoption. Other decreases include the loss of the AFG grant revenue in the amount of $492,370 due to the grant expiration on December 31, 2025, and lower than expected Fire inspection revenue. However, these losses are partially offset by a projected increase of $1.3 million in interest income due to year-to-date actuals received higher than expected, and $233,110 transfer in from General Fund Capital to offset legal services related to employment matters, personnel, and financial investigations expenses.
The revised budget estimated General Fund revenue at $94,990,231. The mid-year revenue projection is $94,801,702. Table 3 below shows General Fund revenue projections for the categories with mid-year adjustments compared to the revised budget.
Table 3
Mid-Year General Fund Expenditures
The overall General Fund expenses are projected to be $2.9 million higher than the current revised budget of $95,349,328, for a total General Fund appropriation of $98,299,717. The expenditure increases are due primarily to MOU salary and benefit changes. The table below shows the General Fund expenditure projections by department. The Mid-Year Recommended column incorporates the recommended adjustments.
Table 4
To break out the salary and benefit changes Table 5 shows the changes from the original budget by department. $2.4 million of the $2.9 million is directly resulting in MOU negotiated changes and projected changes for unsigned MOUs. It also includes a Police overtime increase of $250,000 and Fire part-time increase of $28,770.
Table 5
Additional expense updates outside of the salary and benefit projections are an increase in expense in Internal Services (Revenue) for overages in budgeted Bank Service charges that are incurred from credit card and online payment fees in the amount of $130,000. Internal Services (Human Resources) also needs an additional $21,500 appropriation for contracted services related to MOU negotiations. Non-departmental includes an appropriation in the amount of $233,110 for legal services related to employment matters, personnel, and financial investigations expenses; a transfer in from General Fund Capital offsets this expense. Public Works is in need of an additional $86,750 for unexpected repairs to facilities. The City Clerk's budget is lowering their expenses due to election costs coming in lower than expected. Fire also has slightly lower expense projections due to the following: loss of AFG grant (42,690) and increase in Fire Academy costs of $35,400. Lastly an appropriation of $70,000 in City Council for Legislative Advocacy. Expenses unrelated to MOU negotiations total $540,939.
Table 6
Mid-Year General Fund Capital
Council received a formal presentation at the August 6, 2025 Council meeting regarding the unassigned proceeds from the Waste Management contract and the one-time surplus General Fund Capital funds. The total funding available totaled $1.6 million based on the available funds between the General Fund Capital, and Parks, Recreation, and Cultural Services, which is funded by the General Fund. At that meeting, the Council appropriated $290,000 to the following projects in Table 7 (Resolution 2025-145):
Table 7
In addition, $110,000 was appropriated at the November 19, 2025, Council meeting for work needed at Salas Park due to repairs as a result of vandalism. This left $1.2 million for the plan of funding unexpected legal services related to employment matters, personnel, and financial investigations, and evaluating at mid-year what amount was available for additional projects. It is recommended to transfer $233,110 back to the General Fund to offset these expenses, leaving approximately $900,000 for new projects. Table 8 includes the list of recommended General Fund Capital Project changes for mid-year:
Table 8
This will leave approximately $100,000 in fund balance for unexpected overages that would come back to Council for approval or for the availability to program in Fiscal Year 2026-27. Attachment 2 includes all mid-year Capital Improvement Project (CIP) requests.
Electric Utility
The Electric Utility (EU) projects an overall expenditure increase of almost $3.7 million, primarily related to power generation costs due to soft market prices and less plant revenue to offset fixed costs and new Capital expense (Table 9). These are offset slightly by a reduction in transmission charges based on energy consumption. The Capital request forms are attached.
Table 9
Additional Mid-Year Adjustments
Revenues
Enterprise and Special Funds are recommended to be adjusted according to the list below. Streets is expecting increases in revenue from Measure K and Federal funding, but a decrease of $304,202 in development impact fees. Capital Outlay decreases are due to development impact fees coming in lower due to slowing activity. Electric Utility has various offsetting revenues in various areas with the most notable increases in revenue from Energy Cost Adjustments and decreases in revenue from customer accounts. Wastewater and Water are both experiencing an increase in revenue from customer accounts, and Employee Benefits is expecting offsetting revenue from the increases in Chiropractic and Life Insurance due to higher rates and increases in salary due to MOU updates. Please see the changes in revenue in Table 10.
Table 10
Expenses
Enterprise and Special Funds are recommended to be adjusted according to the list below. Any changes not listed below are due to MOU negotiation projections with notable expense increases in EU listed above. Community Development recommends moving $1.5 million for the Comprehensive General Plan from their operating budget to a Capital project. This move will keep the funds within CDD, but allow for the unused expense to roll year to year over the length of the project. Transit needs an additional $5,000 due to unexpected repairs to buildings. Police request allocating funds from the Vehicle Replacement Fund to outfit the Animal Service Truck and an emergency response SUV. The Employee Benefits accounts for Chiropractic are increasing due to contract increases as well as Life Insurance costs, which also directly correlate with increases in employees’ salaries. Workers’ Compensation is requesting an increased allocation of expenses from the fund balance.
Table 11
Personnel Adjustments
Staff is recommending the addition of four full-time positions, the deletion of two current-existing vacant positions, and the reclassification of two positions. In the Table 12 below is showing these recommendations.
Table 12
• Add one Police Officer Community Liaison Officer - This position will follow the department's core values of safety and security of the community and will be assigned as the second officer to the CLO (Community Liaison Officer) Program. This position will enable proactive policing downtown and in the same focused areas of the Downtown Ambassadors. The savings from the Ambassador program will fund this position, bringing internal, well-trained enforcement to this focused area.
• Add one Senior Billing Specialist - Creating the Senior Billing Specialist position is a critical investment in the success of the Revenue Division. This role will provide leadership and support to the Billing team-overseeing staff, offering hands-on training, and resolving complex billing issues with expertise. Beyond billing, this position will also assist Customer Service during high-demand periods and act as a supervisor when needed, ensuring continuity and quick decision-making. Adding this position will enhance efficiency, improve staff confidence, and elevate the overall quality of service provided by the City. The official salary table for this position will be created by Human Resources and will come back to the Council for approval in the coming months.
• Deletion of one Customer Service Representative - Senior Billing Specialist will take the place of this position. There are currently two vacant positions due to turnover in the department.
• Add Management Analyst - Confidential and delete Health and Safety Specialist - There is a current vacancy in Risk Management for a Health and Safety Specialist for some time and despite robust recruitment efforts, have not been successful in filling the vacancy. A Management Analyst - Confidential would allow for more balanced workload distribution across core risk functions, better align with work currently being performed and anticipated going forward, create internal promotional opportunities and support succession planning with the division and reduce the operational risk of keeping a critical position vacant for an extended period of time. The addition of a Management Analyst - Confidential position and deletion of a Health and Safety Specialist is a no-cost change.
• Reclass Deputy City Clerk to Assistant City Clerk - The incumbent has been performing higher-level duties for the past year and this action will add funding for this classification. Human Resources will determine if the candidate is qualified for the position before formally reclassifying. The updated salary table will be completed by Human Resources and brought to the Council for approval in the coming months.
• Add one Senior Plans Examiner - CDD relies on contract services for building and fire code plan review. These services have progressively become more expensive and less dependable, preventing Community Development from being able to provide the quality of service the City of Lodi residents deserve. Creating a Senior Plans Examiner position will not only allow the department to retain a substantial amount of revenue by keeping plan review services in house but also produce better quality reviews in a timelier manner. This position would also be responsible for training and developing new plans examiners to promote growth and sustainability creating less reliance on contract services in the future. The updated salary table will be completed by Human Resources and brought to the Council for approval in the coming months.
• Reclass Program Coordinator to Recreation Manager (PRCS) - The incumbent has been performing higher-level duties for the past year and this action will add the classification. The total increased cost associated with reclassifying the position from Program Coordinator (Step 4) to Recreation Manager (Step 0) is $12,700 annually. The department anticipates that increased revenue generated at Lodi Lake-driven by significant growth in entrance fees, rentals, passes, and overall visitation-will support and fully absorb this additional cost. Long-term funding will continue to be supported through the Parks, Recreation & Cultural Services operating budget and sustained revenue growth at Lodi Lake.
Budget and Fiscal Policy
Staff has included a red-line copy of the Fiscal and Budget Policy for recommended adoption, Attachment 3. The proposed changes were reviewed by the Finance Committee on January 28 and they recommend to approve the adoption of the updated Budget & Fiscal Policy, setting a new Pension Stabilization funding balance status at 70% and assigning fund balance to the Memorandum of Understanding cost increases. The last few years (FY 2022-23, FY 2023-24 and FY 2024-25), the fund balance has not been invested in Public Agency Retirement Services (PARS), the City’s pension trust. Although the City Treasurer has the authority to redirect these funds to the pension trust, it is recommended to approve the adoption of the updated Budget & Fiscal Policy, setting a new Pension Stabilization funding balance status at 70% and restricting fund balance to the memorandum of understanding cost increases. The fiscal year 2024-25 audit is expected to be completed and presented to Council in the coming weeks, where the fund balance will be recommended for the same goal. Table 13 shows the City’s current funding level:
Table 13
Exhibit A, attached to this report, specifies the line item budget adjustments needed for all of the above recommended mid-year adjustments.
STRATEGIC VISION:
3A. Fiscal Health: Promote City's transparency & fiscal fluency.
FISCAL IMPACT:
Revenue and expenditure budget adjustments per Exhibit A to address staff recommendations.
FUNDING AVAILABLE:
The mid-year General Fund changes include a revenue appropriation decrease recommendation of $188,530 and an expense appropriation increase of $2,950,398. Expenditure requests shown in the tables above for Electric Utility, Community Development, Equipment Replacement, and Vehicle Replacement will come from those relevant fund balances.