City officials discuss conservative revenue estimates, harbor improvements, staffing, and rising operational costs ahead of final budget adoption.
The City of Avalon offered an early look at its proposed 2026–27 operating budget during a May 5, 2026, presentation by Finance Director Matt Baker, outlining projected revenues, expenditures, staffing levels, and major financial priorities for the coming fiscal year.
While several utility-related budgets, including sewer, saltwater, and trash operations, will be addressed separately at a future meeting, the presentation provided an overview of the city’s General Fund and Harbor Fund finances as Avalon prepares for another year of infrastructure projects, harbor operations, tourism activity, and municipal services.
“We’re kind of giving you a sneak peek at where we’re at in the budget process,” Baker told councilmembers during the presentation.
According to Baker, discussions with department heads were still ongoing at the time of the meeting, but he did not anticipate major changes between the preliminary figures and the final proposed budget.
The city currently operates with approximately 77.8 full-time equivalent employees. While no new full-time positions are included in the draft budget, Baker noted that some departments have requested increases in part-time staffing hours.
He also explained that Avalon has shifted some positions to contracted services, including planning and building official operations.
“We’ve contracted out now the planning director position, if you will, and the building official services,” Baker said, noting that the city currently has one full-time equivalent employee remaining within the planning department.
Under the proposed General Fund budget, Avalon expects to finish the current fiscal year with approximately $14.5 million in reserves after beginning the year with roughly $15.5 million.
According to Baker, current-year operating revenues are estimated at approximately $15.1 million, while operating expenditures are projected at about $13.9 million if all budgeted spending occurs.
Some planned projects funded through grants were delayed into the current fiscal cycle, which Baker said also affected the city’s financial outlook heading into next year.
For the 2026–27 fiscal year, Baker projected approximately $14.2 million in General Fund operating revenues, describing the estimate as intentionally conservative.
“Again, I feel that number is conservative, but you’ve heard me say it a million times, I want to make sure we’re budgeting at a level we feel really confident we’re going to hit,” Baker said.
He added that conservative forecasting helps protect the city against unexpected disruptions that could impact tourism revenue or local activity during peak visitation periods.
Operating expenditures for the General Fund are projected at approximately $14 million, including about $168,000 allocated toward new capital projects without drawing from reserve funds.
While the projected surplus remains modest, Baker indicated there could still be upside potential in revenue categories such as transient occupancy tax and property tax collections.
Personnel expenses continue representing the largest share of Avalon’s operating budget.
According to Baker, wages account for approximately 54% of total expenditures, while overtime represents another 10%.
The city is also seeing some cost shifts between departments due to staffing changes and retirements.
Baker noted that retirements within the Fire Department have created some temporary cost savings as newer employees enter positions at lower salary levels.
“That means there’s going to be other departments seeing an increase because it’s not a decrease in spend. It’s just a change in how we allocated that spend,” Baker explained.
Certain departments are also seeing operational adjustments based on prior-year spending.
Recreation and Community Services, for example, incurred several one-time maintenance expenses during the current fiscal year that aren’t expected to continue at the same level next year.
One of the more notable operational costs highlighted during the presentation was Avalon’s annual Fourth of July celebration.
According to Baker, approximately 10% of the city’s operating and maintenance spending is associated with Fourth of July activities and related support services.
“Not suggesting we spend less,” Baker clarified. “I just want to draw that it is not an insignificant amount to the overall budget that we do spend for that day.”
Contract services also remain a major component of Avalon’s overall expenditures.
Baker noted that 47% of the city’s contract service spending is tied to the city’s agreement with the Los Angeles County Sheriff’s Department.
Another significant portion of contract spending supports the Chamber of Commerce, operating as Love Catalina Island Tourism Authority.
According to Baker, the Chamber receives approximately 22% of Avalon’s transient occupancy tax revenue allocation.
The city is currently proposing an increase to the Chamber allocation, raising it to approximately $1.7 million compared with $1.65 million during the current fiscal year.
Public works contracts are also expected to increase, particularly in areas related to maintenance and tree trimming services.
“Other major contracts in public works include our tree trimming contract, which we are likely going to be requesting an increase, a significant increase over prior years,” Baker said.
He indicated the city is currently evaluating an increase beyond the roughly $100,000 budgeted previously for tree maintenance services.
The proposed Community Services budget also reflects an increase of approximately $20,000 compared with last year.
Beyond the General Fund, Avalon’s Harbor Fund continues showing strong financial performance as harbor activity, mooring operations, and waterfront services remain central to the city’s economy.
According to Baker, the Harbor Fund began the current fiscal year with approximately $2.4 million in working capital and is projected to finish the year at roughly $3.5 million.
For 2026–27, Harbor Department revenues are estimated at approximately $12.4 million, while expenditures are projected at $9.9 million.
That would leave an estimated net operating revenue of roughly $2.5 million.
While Baker acknowledged the figure appears high, he noted the Harbor Department is preparing for several major capital improvement projects in the coming year.
“While that number is high, we have a lot planned CIP projects next year,” Baker said.
Many of those projects are expected to receive grant support, although local matching funds will still require significant city contributions.
“Even though a lot of these projects are largely grant funded, there is still significant local match requirements for those projects,” Baker explained.
The Harbor Department’s contract expenditures for 2026–27 are estimated at approximately $2.1 million.
More than half of that amount is tied to Avalon’s contract with Los Angeles County Lifeguards, which continue providing critical marine safety and waterfront emergency response services throughout Avalon Harbor.
The proposed budget presentation serves as an early framework ahead of future council discussions and final budget adoption later this year.
April Avalon Harbor Activity Report
| People Aboard Boats | 3272 | Average Temp- High | 69 |
| Vessels Moored | 813 | Average Temp- Low | 55 |
| Vessels Anchored | 60 | Average Sea Temp | 67 |
| Moorings Sold/Transferred | 0/0 | Rain (Inches) | .04 |
| Citations Issued/ Discharges | 0/0 | Rain (Days) | 2 |
| Total Cruise Ship Passengers/ Visits | 46,352/ 13 | Weather Warnings | 5 |
Additional Harbor Patrol Stats:
- Medical calls & assists = 6
- Public Assists = 84
- Security Patrols = 371
- Enforcement encounters = 30
- Assisted other agencies = 9 times
- Performed maintenance on boats, floats & moorings = 56
