Halfway through fiscal year 2022-23, Pomona could be looking at an $8.5 million surplus.

The bright financial outlook results from higher than projected revenues, Andrew Mowbray, the city’s finance director, said during a midyear budget review last week. The city originally anticipated a surplus of $57,536 when it adopted the budget in June.

Taxes make up 82% of Pomona’s revenue, according to a city report.

Highlights of the budget include a projected $18.8 million in utility tax revenue, which is $2.8 million higher than originally budgeted. The number is based on recent rate increases for electricity and the higher cost of natural gas.

Property tax revenues are expected to bring in $4.3 million, while sales and use taxes are projected to come in at $24.2 million — $2.4 million more than budgeted.

Another revenue source seeing higher than expected revenues is cannabis business taxes. With the scheduled opening of the two cannabis-based businesses in spring, the year-end estimate for this tax is expected to be about $300,000 higher than originally budgeted.

Part of the $8.5 surplus includes $6.8 million in American Rescue Fund dollars, which could be used for potential revenue loss in future fiscal years, according to a city report.

The city projects it will end the fiscal year June 30 with a $51 million in reserves — well over the city’s 22% minimum fund balance policy.

The city expects to spend $141.6 million this fiscal year, with revenues reaching $150.1 million.

There will also be savings throughout city departments because of vacant posts. The police department is estimated to be about $2 million under budget mainly due to vacancies, including 18 sworn positions.

As part of Monday’s presentation, a number of requests were also made. These include $11,000 to hire a part-time specialist to enhance the city’s social media outreach and $500,000 to complete work at Towne and Bonita avenues, an intersection with a history of left-turn related accidents.

While the city is in a financially sound position, that could change depending on the nation’s economy and a possible recession, Mowbray said.

The fiscal year 2023-24 budget will be prepared soon and will include “many programs and areas that will require or least the consideration to increase funding,” the city report states.

During a 10-year budget forecast presentation in December, city leaders were advised to take measures to prepare for a possible economic downturn.

Measure PG, a sales tax increase approved by voters in 2018, is scheduled to sunset in 2029, which could lead to a deficit in the city’s general fund. One way the city can prepare for the possible revenue drop is by putting a measure on a future ballot to remove the sunset clause.

Two 2023-24 budget preview sessions that will include residents’ feedback are set for Monday at 5:30 p.m. and April 5 at 3 p.m. at Pomona City Hall.