Summary
The City’s projected FY26 General Fund balance is now anticipated to reach $799.8M (12.6% of revenues), growing by $290.6M from Q2 to Q3. This increase is encouraging but was made possible in large part by non-recurring factors, like an additional $144.3M in liquidated prior-year encumbrances, reduced obligations due to later-than-anticipated bond issuance, Labor Reserve realignment, and the sale of City owned property. Even with the adjusted projections driving the FY26 General Fund balance higher, the City anticipates that FY26 expenditures will outpace revenues, resulting in a projected $559.1M operating deficit. This QCMR shows small adjustments to FY25 General Fund Revenue from Other Funds, obligations, and fund balance from unaudited Q2 figures to audited Q3 figures, an unusual occurrence. The FY26 fund balance remains positive and there is not a variance from the PICA-approved FY26-30 Five-Year Plan, but adjustments that increased the projected FY26 General Fund balance cannot be consistently relied upon.