TO: HONORABLE CHAIR AND MEMBERS OF THE TRANSACTION AND USE TAX OVERSIGHT COMMITTEE
FROM: Javier Carcamo, Finance Director
PREPARED BY: Evan Crockett, Management Analyst - Special Projects
SUBJECT:
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District Sales & Use Tax (Measure T) Budget to Actual Report for FY 2025/26
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RECOMMENDATION
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Receive and File.
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PRIOR ACTION/VOTE
On July 17, 2018, the City Council adopted Resolution No. 18-3953, proposing an ordinance enacting a transaction and use tax be placed on the November 6, 2018 ballot (Vote 5-0).
On December 18, 2018, the City Council adopted a Resolution declaring the results of the November 6, 2018, General Election, including therein adoption of Ordinance No. 540-18 enacting a Transaction and Use Tax (Vote 5-0).
On February 5, 2019, the City Council adopted a Resolution establishing an advisory Transaction and Use Tax Citizens Oversight Committee (Vote 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
I am pleased to present the Transaction and Use Tax (Measure T) oversight report for the fiscal year ending June 30, 2026. The Advisory Transaction and Use Tax Citizens Oversight Committee provides oversight of Measure T district sales tax revenues and expenses. This Measure T Oversight Report covers the fiscal year from July 1, 2025, through June 30, 2026. This report includes a recap of all Measure T financial activities and accomplishments. As of the date of this report, the independent external audit for Fiscal Year (FY) 2025/26 has not been concluded. As a result, the actual amounts are subject to change should accounting adjustments be necessary prior to finalizing the audit.
Revenues
The adopted and amended FY 2025/26 total revenue projection is $28.7 million and $30.1 million, respectively. The City's sales tax consultant provided updated projections throughout the fiscal year based on factors such as the economic landscape, actual sales and collections, and upcoming economic developments. During the fiscal year, the budget was amended by $1.35 million, of which $1.2 million was attributable to investment earnings. The City chose to remain conservative in its revenue projections and increased the sales tax revenue budget by $150,000, bringing the total sales tax revenue budget to $28.8 million, and the total Measure T Revenue to approximately $30.1 million.
The graph below compares the total revenue budget to total revenue receipts.
At the March 2026 Oversight Committee meeting, we projected sales tax revenue at the close of the fiscal year to be nearly $28.7 million based on sales tax collections through December 2025. Due to higher-than-expected sales tax receipts in January and February 2026, staff recommended that the City Council amend the sales tax budget by $150,000 bringing the amended budget for sales tax revenue to $28.8 million. The FY 2025/26 sales tax revenue collected was $29.2 million above the prior year's revenue of approximately $28.3 million, a sign of revenue plateau during the last few fiscal years as shown on the following graph. The following table summarizes the Measure T sales tax revenue collections since 2020. The FY 2025/26 sales tax revenue collection was approximately 3.1% or $884,550 over the prior year.
Staff also recommended budgeting for investment earnings and amended the budget by $1.2 million, bringing the total Measure T revenue budget to nearly $30.1 million. As of June 2026, the fiscal year-to-date total Measure T revenue is $30.9 million, approximately $814,000 over the amended budget.
Expenses
The FY 2025/26 amended expenditure budget is approximately $32.5 million. Akin to revenue projections, staff proposed amendments to the adopted budget to account for an increase in personnel cost based on approved labor agreements after budget adoption, influx of capital improvement projects, and unanticipated recurring and one-time expenses. The year-to-date expenditures at the close of the fiscal year are $35.6 million. This amount includes Capital Improvement Plan project expenditures. Excluding the CIP project expenditures, the operating budget was approximately $1.1 million under budget. While total expenses were below the established budget, operating costs continue to experience increases in various personnel expenses categories, such as CalPERS Health premium increase, CalPERS retirement, and leave buyouts. These items were primarily linked with Fire and Police. The table below summarizes Measure T Fund total operating expenses.
Below is the list of significant Measure T fund expenses. This list is nonexclusive:
• 69 authorized positions funded by Measure T since inception;
• 65% of the Measure T budget is dedicated to public safety;
• Police
o Police vehicles, including upfitting costs
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o Police safety equipment for new hires;
o Police Taser and body-worn cameras, equipment, and license;
o Police License plate reader software;
o Police Drone equipment; a DFR (drone first responders) room, and upfit it with all necessary equipment and electrical capabilities needed, and we purchased 1 drone
• Fire
o Fire annual hose test services;
o Fire annual ladder test services;
o Fire EMS Priority Dispatch EMD;
o Fire mapping response system and image trend annual fees;
o Fire PSEC radio system annual subscription and radio installation;
o Fire Mobile data terminals;
o Fire PPE gear and safety equipment (i.e., turnout gear and other Fire Dept services and equipment);
o Fire replacement equipment (i.e., hoses and ladders);
o CAL FIRE Wildland Fire Protection Agreement;
o Fire emergency software (i.e., Tablet Command, Pulse Point, CAD integration system);
o Fire station annual facilities maintenance and major repairs:
o Fire EMS rental agreement;
o Fire Station 2 and 3 generator replacements.
o Fire Stations maintenance/repairs;.
o Fire Administration office furniture replacement
• Economic Development data market research and event marketing;
• Graffiti & weed abatement;
• Vehicle Lease program;
• Establish operating and sustainability reserves
Capital Improvement Plan
The Measure T revenue remains an essential funding source for several projects in the five-year Capital Improvement Plan, as adopted by the City Council. During the Fiscal Year 2025/26, Measure T allocated approximately $1.2 million to fund the rehabilitation and improvement of the Los Alamos Hills Sports Park and Torrey Pines synthetic turf replacement. The Police Department was allocated nearly $200,000 for locker room remodels and office improvements, including support for the drone program. Fire Station 1 is budgeted for about $3.2 million in improvements for concrete and sewer connections. The Measure T fund is also partially funding and financing the City’s library project. Nearly $2.3 million has been budgeted for the library’s improvements towards the children's area expansion, as well as for the roof, HVAC, flooring, walls, and rain mitigation.
In addition to these completed and current projects, the following table summarizes other Capital Improvement Plan projects funded or partially funded by the Measure T Fund.
A complete list of Measure T Fund Capital Improvement Projects, including year-to-date expenditures and remaining balance, can be found in the attached report.
Operating and Sustainability Reserves
The City Council's formal policy calls for Operating Reserves of 25% of the adopted budget, with an informal goal of 30%. The Measure T operating reserve balance of $5.4 million fulfills the City Council's operating reserve requirement. In addition, the Measure T fund is setting aside operating reserves of approximately $4.6 million for the Fire District, almost $600,000 for the Community Services District, and approximately $300,000 for the Library Fund to meet the required reserve requirements.
In addition to the Operating Reserve, certain commitments and assignments of fund balance will help ensure adequate financial resources for planned expenses and unforeseen circumstances and events such as an economic downturn, catastrophic events, unanticipated expenses, and one-time purchases.
During the FY 2025/26, the Measure T fund will have an estimated ending balance of $26.8 million, net of contributions and uses, in various Operating and Sustainability Reserves. The amounts in each Operating and Sustainability Reserve account are shown in the table below.
Fiscally responsible budgeting, prudent long-term financial projections, fund oversight, and financial transparency have strengthened the City's reserves since the implementation of Measure T. It is consistent with the City Council's Goal to maintain a high-performing organization that values fiscal sustainability, transparency, accountability, and organizational efficiency. Measure T is a general-purpose tax revenue source that supports the City's operations, including emergency services such as police, fire, and paramedics; street maintenance and improvements; parks and recreation; maintenance of public facilities, such as graffiti removal and other expenses that support the Murrieta quality of life. The FY 2025/26 Budget to Actual report can be found attached to this narrative report.
FISCAL IMPACT
There is no fiscal impact related to receiving and filing this report.
ATTACHMENTS
Attachment 1. FY 2025/26 Budget to Actual report