HomeMy WebLinkAboutRes 2026-004RESOLUTION NO. 2026-004
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, ESTABLISHING AN OPERATING BUDGET
POLICY
WHEREAS, the Charter of the City of Palm Desert provides that the City
Administrator shall propose budget recommendations for the next fiscal year under the
direction of the Mayor and the City Council in the form, in the manner , and at a time as
the Council shall prescribe by resolution; and
WHEREAS, the City desires to formalize its current budget procedures and
policies; and
WHEREAS, City's Adopted Budget designates how all revenues shall be allocated
among City functions, services, and liabilities, such as public safety, public works, parks,
facilities, employee retirement costs, and community services; and
WHEREAS, the City desires to establish a formal operating budget policy to meet
best practices, support fiscal transparency, and ensure public participation; and
WHEREAS, the City Council has been presented with an Operating Budget Policy
in the form attached to this Resolution as Exhibit A and by this reference incorporated
herein.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT
DOES HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS:
SECTION 1. The foregoing recitals are true and correct and are incorporated
herein by this reference.
SECTION 2. The City Council hereby adopts the Operating Budget Policy,
attached hereto as Exhibit A.
SECTION 3. The City Manager is authorized to implement, administer, and
periodically review and update the Operating Budget Policy, consistent with applicable
law and City policy.
SECTION 4. The Operating Budget Policy shall be incorporated into the City’s
Administrative Procedures as Policy No. FIN-014.
SECTION 5. This Resolution shall take effect immediately upon adoption.
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ADOPTED ON JANUARY 22, 2026.
EVAN TRUBEE
MAYOR
ATTEST:
ANTHONY J. MEJIA
CITY CLERK
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that
Resolution No. 2026-004 is a full, true, and correct copy, and was duly adopted at a
regular meeting of the City Council of the City of Palm Desert on January 22, 2026, by
the following vote:
AYES: HARNIK, NESTANDE, PRADETTO, QUINTANILLA, AND TRUBEE
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
RECUSED: NONE
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of Palm Desert, California, on __________________.
ANTHONY J. MEJIA
CITY CLERK
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1/23/2026
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EXHIBIT A
ADMINISTRATIVE POLICY NO. FIN-014 “OPERATING BUDGET POLICY”
CITY OF PALM DESERT
ADMINISTRATIVE PROCEDURES
Subject Operating Budget Policy
Policy No. FIN – 014
Date Issued: January 22, 2026
Approved by Resolution No. 2026-004 Authorizing an Operating
Budget Policy
Authored by Finance Department
OPERATING BUDGET POLICY
I.PURPOSE
The Government Finance Officers Association (GFOA) recommends that governments
adopt a policy that defines a balanced budget, commits to ensuring a balanced budget is
maintained in order to provide the best possible services to taxpayers, and provides
disclosure when a deviation from a balanced budget occurs.
These Budget Policies establish the City of Palm Desert’s guidelines for budgetary
decision-making and standards for sound fiscal performance. Adopting and consistently
following these policies supports the City’s current and long -term goals in a fiscally
responsible and sustainable manner, consistent with recognized municipal budgeting
best practices. Objectives are as follows:
• Ensure timely adoption of a balanced annual budget.
• Promote long-term financial sustainability and structural balance.
• Strengthen transparency and public participation.
• Ensure effective internal controls and budget compliance.
• Improve capital planning and infrastructure lifecycle management through the Ten -Year CIP.
• Support service delivery through performance and outcome measures.
II.SCOPE
1. Fiscal Year
The City of Palm Desert fiscal year is July 1 through June 30.
2. Roles
• City Council: Adopts budget and appropriations; establishes budget goals and
priorities.
• City Manager: Directs budget development and implementation.
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• Finance Department: Leads forecasting, budget development, monitoring,
reporting, and internal controls.
• Departments: Submit service level needs, staffing requests, and CIP proposals
meeting priorities and goals of City Council.
• Public: Provides input through hearings and accessible budget information.
3. Annual Budget Phases
1. Budget Development
2. Budget Review
3. Budget Adoption
4. Budget Monitoring
III.OPERATING & CAPITAL BUDGET POLICIES
1. Balanced Budget Requirement
The City shall adopt and maintain a balanced annual operating budget and an integrated
capital budget. Annual operating expenditures shall not exceed annual operating
revenues plus available unrestricted fund balance, subject to reserve policy requirements .
Structural Balance: The City shall strive for a structurally balanced budget where ongoing
expenditures are supported by ongoing revenues. The City shall not rely on one -time
revenues, reserves, or deferrals to sustain ongoing costs, except as permitted un der
FIN003.
a. Administrative Policy No. FIN003 (Reserve Compliance)
The City shall maintain reserves consistent with the City’s adopted Reserve Policy
FIN003. Use of reserves in budget development or budget execution shall comply
with FIN003 requirements, including minimum targets, approved purposes,
replenishment requirements, and Council approval thresholds as applicable.
Reserves shall be used primarily for emergencies, disaster recovery, economic
downturn stabilization, one-time strategic investments, and cash flow or timing
needs consistent with FIN003.
2. Public Involvement & Transparency
Public participation shall be encouraged through public hearings, outreach and interactive
publication of accessible budget materials and summaries on the City’s webpage. The
City will strive to provide a user-friendly online budget portal, plain-language summaries,
and ADA-compliant formats.
3. Council Role & Budget Priorities
City Council shall establish budget priorities early enough to inform the City Manager’s
proposed budget. Council priorities may be adopted by resolution, incorporated into
Council goal-setting, or otherwise communicated through the adopted budget calendar .
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4. Multi-Year Financial Forecasting
The City shall prepare a multi-year financial forecast projecting revenues and
expenditures over a five to ten -year period (or longer as available) to guide long -term
fiscal planning and serve as the framework for annual budgeting. Forecasts will be
implemented using best practices and should include baseline trends and alternative
scenarios, and identify risks, long-term obligations, and known cost drivers.
5. Operating Budget Standards
The operating budget shall include revenue and expenditure appropriations, staffing
levels, department missions and objectives, and performance measures and targets.
Departments shall identify service impacts for proposed reductions and expected
outcomes for enhancements.
6. Administrative Policy No. FIN-015 (Capital Improvement Program (CIP) Plan and
Budget — Ten-Year CIP)
The City of Palm Desert shall develop and maintain a Ten -Year Capital Improvement
Program (CIP) to plan for the repair, rehabilitation, replacement, and construction of
municipal infrastructure and major assets.
The Ten-Year CIP shall be informed by asset condition assessments and lifecycle needs;
service level priorities; regulatory requirements and risk reduction needs; strategic plans,
Council priorities, and community input; funding constraints; and deliverabi lity/readiness
considerations.
The annual CIP budget shall be developed in conjunction with the operating budget to
ensure the City can afford both the construction of assets and the long -term operating
and maintenance impacts associated with completed projects.
In order to support informed decision making, the following enhancements will be included
as part of the CIP Plan:
• Require a lifecycle or long -term asset impact statement for capital projects seeking funding
(including estimated operating impacts when applicable).
• Periodically evaluate stalled or inactive projects and reprogram funding when warranted to
maintain deliverability and financial flexibility.
• Use an adopted CIP prioritization framework to score and rank projects transparently and
consistently.
• Use the Ten-Year horizon to identify long -term funding gaps and develop strategies (grants,
partnerships, phased delivery, cost control).
7. Basis of Budgeting & Fund Inclusion
The City shall prepare budgets consistent with applicable accounting standards. The
budget document shall present a comprehensive view of the General Fund and other
budgeted funds, including the Ten-Year CIP and annual CIP appropriations.
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8. Long-Term Infrastructure Affordability
The City will evaluate the affordability of the Ten -Year CIP by comparing projected capital
needs with projected funding capacity and long -term operating impacts, and will identify
funding gap strategies such as grant planning, phased delivery, prioritizat ion adjustments,
and O&M planning.
IV.BUDGET EXECUTION & CONTROLS
1. Budgetary Control
Budgetary control shall be established through the City’s annual appropriation authority.
Departments shall not expend beyond authorized appropriations unless revised through
approved processes. The City Manager has the authority to move budgets inter and intra
to support operating needs of the organization.
2. Financial Reporting & Monitoring
Finance shall monitor revenues and expenditures throughout the fiscal year, identify
significant variances, and present regular monitoring reports to Council. At minimum, the
City should provide a mid-year update to City Council (if necessary) and quarterl y
monitoring reports to Department Heads.
3. Budget Variance Response Policy (FIN003 -Aligned)
When a deficit is projected, the City shall identify alternative funding sources, reductions,
reallocations, or deferrals; require departments to submit mitigation plans when material
overages are forecasted; and use reserves only in accordance with Reserve Policy
FIN003, with required documentation and replenishment plans.
Deficit Trigger Protocol:
• Early Warning Trigger: projected variance > 1% of General Fund.
• Action Trigger: projected variance > 2% of General Fund (activate spending controls and
Council briefing).
4. Performance Reporting
Budgets shall include performance data and targets when feasible. The City should
publish an annual performance and outcomes summary alongside the budget.
5. Encumbrances
Departments shall encumber funds expected to be spent in the current fiscal year and
close unnecessary encumbrances prior to year-end. Exceptions may be granted for major
contractual obligations in coordination with Finance.
V.REVENUE POLICIES
1. General Revenue Policies
Forecasts shall be supported by objective data and internal methodologies. General Fund
revenues shall not be earmarked unless required by law or accounting standards.
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2. One-Time Revenues
One-time revenues shall be used for one-time expenditures. Ongoing expenditures shall
be funded by ongoing revenues. Surpluses should prioritize debt reduction, infrastructure
backlog reduction, technology modernization, or reserve replenishment.
3. User Fees
User fees shall follow the City’s adopted user fee policy and be reviewed periodically.
4. Economic Indicators & Forecasting
The City shall consider multiple economic indicators and historical trends when
developing revenue projections and maintain a revenue risk register for major revenue
sensitivities.
5. Legislative & Policy Monitoring
Finance shall monitor State and federal policy changes affecting City revenues and adjust
projections as needed.
VI.EXPEDENTURE POLICIES
1. General Expenditure Policies
The budget process shall weigh competing requests within fiscal constraints. New
initiatives outside the annual budget process should be limited to urgent needs,
accompanied by a funding plan, and may use reserves only in accordance with Reserve
Policy FIN003 (Productivity Savings/Innovation Reserve).
2. Pension & OPEB Obligations
The City shall include appropriate funding for long-term obligations consistent with
actuarial recommendations and legal requirements and include trends and risks in the
multi-year forecast.
3. Budgeted Positions & Vacancy Factor
All positions shall be budgeted. Grant-funded positions shall be limited to grant duration.
Vacancy factors may be used where appropriate to align budget with expected actuals.
4. Employee Organization MOU’s
The City shall budget compensation and benefits consistent with labor agreements and
include multi-year labor cost projections and fiscal impact analysis for significant changes.
VII.IMPLEMENTATION & COMPLIANCE
1) Finance shall publish annual budget instructions, calendar dates, and templates.
2) Departments shall comply with submission requirements and provide supporting
evidence for requests.
3) Deviations from these policies require documentation and approval by the City Manager
and/or City Council as applicable.
4) Policies shall be reviewed annually and updated as needed.
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VIII.ATTACHMENTS (TEMPLATES)
• Attachment A — Annual Budget Calendar (Template)
• Attachment B — Operating Budget Request Form (Enhancement Template)
• Attachment C — Deficit Response Playbook (FIN003-Aligned)
• Attachment D — Ten-Year CIP Integration Summary
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Attachment A — Annual Budget Calendar (Template)
Department Submissions Due
March 1st
City Manager Proposed Budget
Released
April 25th
Public Workshops/Hearings
May
Council Budget Adoption
2nd Meeting in June
Quarterly Monitoring Reports
Dependent on Scheduled Department
Meetings
Mid-Year Update
1st Meeting in February
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Attachment B — Operating Budget Request Form (Enhancement Template)
Request Title:
Department:
Description:
Objective/Outcome:
Full Cost (staffing/operating/maintenance):
Funding Source:
Sustainability Plan:
Performance Measures:
Service Impacts if Not Funded:
At this time, all Requests are Done in Laserfiche and will continue to be electronic
as systems change.
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Attachment C — Deficit Response Playbook
Trigger Thresholds:
• Early Warning: >1% GF variance
• Action: >2% GF variance
Mitigation Menu:
☐ Spending controls
☐ Hiring review/freeze
☐ Reduction tiers
☐ Reallocations
☐ Deferrals
☐ Reserve use (FIN003 compliant) with replenishment plan
Reporting:
Quarterly and as needed to Council; Mid-Year amendments as required.
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Attachment D — Ten-Year CIP Integration Summary
• Ten-Year CIP updated annually with the budget process.
• Capital projects include lifecycle and operating impact statements.
• CIP projects prioritized using the adopted scoring framework.
• Public transparency includes project maps, summaries, and progress reporting.
• Coordination between CIP and operating budget ensures affordability of new assets.
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