Laguna Niguel is a General Law City and operates under the Council-Manager form of government. The City is governed by a five-member City Council, which is elected by District and serves staggered four-year terms. City Council elections are held in November of even numbered years. Annually, the City Council appoints a Mayor and Mayor Pro Tem from its own membership to serve a one-year term. The City operates primarily as a contract city, utilizing agreements with other governmental entities, private firms and individuals to provide numerous municipal services to the community, including fire services which is provided through the Orange County Fire Authority, and police services which is provided by the Orange County Sheriff’s Department. FACTORS AFFECTING FINANCIAL CONDITION Federal Stimulus Funds. As a result of the COVID-19 health crisis, the Federal Government enacted several different pieces of legislation to stimulate the national economy. The American Rescue Plan Act was a federal stimulus bill signed into law in March 2021. The City of Laguna Niguel received approximately $8.8 million from this legislation. The City has utilized these funds for infrastructure and capital improvements. The funds are required to be fully spent by December 31, 2026. As of June 30, 2024, the City had $0.8 million of unspent American Rescue Plan Act funds. However, the City has a plan to spend the remaining funds on infrastructure and capital improvements prior to the December 31, 2026, deadline. Local Economy. The City’s largest revenue source is property tax. Actual property tax receipts in fiscal year 2023-2024 totaled $28.4 million and represented more than 50% of total General Fund revenues. As a point of comparison, the prior year’s property tax receipts totaled $27.1 million, representing a 4.8% increase in the current year. Property values and sales have remained strong in South Orange County and the City of Laguna Niguel. Sales tax is the second largest revenue source in the City. Actual sales tax receipts in fiscal year 2023-2024 totaled $14.2 million, compared to $14.8 million in the prior year. This represents a 4.1% decrease from the prior year and is consistent with the County and State. Higher interest rates in fiscal year 2023-2024 negatively impacted the auto- transportation sector, and fuel and service stations saw a reduction as well due to lower fuel prices as compared to fiscal year 2022-2023. The City actively monitors trends that affect both property taxes and sales taxes both locally and at the State, as these two revenue sources historically make up more than 80% of annual General Fund revenues. The City adopted a balanced budget for fiscal year 2024-2025 that maintains all service levels and programs. The adopted General Fund budget includes approximately $55.3 million in revenues, $52.8 million in expenditures, and another $2.3 million in transfers out to the CIP fund. The budget provides $10.1 million in funding for the annual Capital Improvement Program that funds projects for the City’s streets, parks and other improvements. ii