La Quinta Investment Earnings Top $10M as Sales Tax Climbs 4.6%
Financial Advisory Commission • La QuintaSeptember 9, 2026
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La Quinta's idle cash earned more than $10 million in fiscal 2025-26, and about 72% of it flowed into the general fund that pays for day-to-day city services. At its Sept. 9, 2026, special meeting, the Financial Advisory Commission received the year-end treasury report, named the citizen auditors who will review the city's 1% Measure G sales tax, and heard that sales tax receipts are outpacing the state. The common thread is a city whose revenue is growing but tied to interest rates, tourism and discretionary spending.
- Investment earnings cross $10M for fiscal 2025-26; about 72% supports the general fund.
- Staff extends maturities into 2- to 3-year investments as Fed rate cuts erode pool yields.
- Three commissioners named to audit Measure G, with a report due to Council in December.
- Q1 2026 sales tax up 4.6%, ahead of 4% statewide, led by restaurants and hotels.
Treasury Clears $10M Mark as Yields Soften
Why it matters: Investment income funds city services without new taxes or fees. With more than $7 million of this year's earnings going to the general fund, interest rate shifts now have a direct effect on what the city can afford.
Where things stand: Principal Management Analyst Rosemary Hallock walked commissioners through the fourth-quarter treasury reports for April, May and June 2026. "So you can see for '25-'26, we crossed the $10 million mark," said Hallock, adding that about 72% goes to the general fund.
As of June 2026, the portfolio sat mainly in U.S. Treasuries, federal agency securities and two government investment pools: LAIF, the state-run Local Agency Investment Fund, and CAMP. Smaller amounts were held in corporate notes, bank certificates of deposit, and pension and OPEB trusts, which are dedicated accounts for retiree health and other post-employment benefits. Just under 6% stayed in liquid funds.
The yield squeeze: The portfolio's effective rate of return dipped slightly. Hallock said the liquid pools reacted quickly to Federal Reserve rate cuts. Staff responded by moving money into 2- to 3-year investments to lock in returns for longer.
The numbers show the strategy at work. In the fourth quarter, about $8.5 million matured or was called, and staff purchased $19.7 million in new securities. Those purchases raised annual income by more than $600,000. Hallock also covered Fed policy, inflation and oil prices as risks that could affect future earnings.
Decisions and stakeholder impacts: Commissioners had no questions and praised the finance staff. Commissioner Keel moved to receive and file the reports, and Commissioner Niblo seconded. The motion passed (For: 6, Against: 0, Absent: 1, Vice Chair Anderson).
Residents who rely on general fund services, including public safety, parks and street maintenance, benefit when idle cash earns more. The trade-off of longer maturities is less flexibility if rates rise sharply or the city needs cash quickly.
What's next: The year-end budget report goes to the commission and the City Council in November.
Citizen Auditors Named for Measure G Review
The basics: Measure G is La Quinta's 1% transactions and use tax. "Measure G is the city's 1% transactions sales and use tax and was approved by voters in November of 2016," said Finance Director Claudia Martinez. It took effect in April 2017, and all of its revenue is subject to citizen oversight.
Why it matters: The oversight subcommittee is the accountability check voters were promised. It reviews revenues, expenditures, reserves and proposed uses of the money before the commission and Council sign off.
Where things stand: Martinez said the subcommittee typically has up to two members, though three is possible, and works with staff. Members should expect up to two 2-hour meetings over the next month. The report goes to the commission in November and to the Council in December.
Asked what the money can be used for, Martinez said the ordinance language is broad. The commission has historically backed larger, community-wide projects. "Public safety is one of the big ones that we fund along with capital improvement projects," said Martinez. Past examples include the cultural campus and Fritz Burns Park.
For the coming year, staff listed public safety services, pavement management, street improvements, a maintenance and operations yard, the cultural campus, the Highway 111 corridor and electrical infrastructure.
A guardrail on spending: Commissioner Keel pushed for a broad-benefit standard. "From my point of view, that these funds should be of a general benefit and not benefiting a particular neighborhood or business area or whatever," said Keel. That principle matters as the list moves from citywide services toward place-specific projects, such as the Highway 111 corridor.
Decisions and stakeholder impacts: Commissioners Lee and O'Meara volunteered. Vice Chair Anderson was added for continuity even though he was absent. The motion appointing Commissioners O'Meara, Anderson and Lee passed (For: 6, Against: 0, Absent: 1, Vice Chair Anderson).
Taxpayers and shoppers, who fund Measure G, gain a citizen review of how the money is spent. Departments that depend on the tax, especially public safety and capital projects, will have their spending examined line by line.
What's next: The subcommittee's compliance report comes to the commission in November and to the Council in December.
Sales Tax Grows, but Exposure Grows Too
Why it matters: La Quinta's sales tax leans heavily on restaurants, hotels and discretionary purchases. Those categories can grow fastest in good times and fall hardest in a downturn.
Where things stand: Hallock reported that first-quarter 2026 receipts, covering January through March, rose 4.6% over last year, compared with 4% statewide. Cities receive sales tax about two months after the sales occur. HDL, the city's sales tax consultant, compiles the data.
General consumer goods lead both regular sales tax and Measure G. Restaurants and hotels rank second. Autos and transportation rank third for Measure G. Online purchases delivered to La Quinta residents generate Measure G revenue even when the regular sales tax goes elsewhere.
Who's on the list: Hallock presented the city's top 25 sales tax generators alphabetically, without dollar amounts because the data is proprietary. New to the list: Arnold Palmer's, Lavender Bistro, In-N-Out Burger and Cliff House. Off the list: Hobby Lobby, Trader Joe's, Verizon and Vons.
The Q&A: Chair Dorsey pressed on the trend. "Are we typically ahead of the state when it comes to that percentage increase? And if so, why?" he asked.
"I know on a per capita basis, we're always above the county and the state," said Hallock. She cautioned that La Quinta does not always lead on growth. She credited per capita spending strength and post-COVID interest in the desert. She also warned that revenue driven by discretionary spending could fall more sharply in a recession.
Decisions and stakeholder impacts: No action was taken. Restaurants, hotels and retailers are carrying a growing share of the city's revenue. That makes the hospitality economy central to funding public safety and street projects, which is a strength now and a risk if tourists and shoppers pull back.
Minor Items
- Leadership: Commissioner Dorsey was reappointed chair for fiscal 2026-27 (For: 6, Against: 0, Absent: 1, Vice Chair Anderson). Dorsey said he wanted others to get a chance to lead.
- Vice chair: Commissioner Niblo was named vice chair after six ayes were heard, with Anderson absent. Niblo asked to serve as vice chair first and then as chair the following year.
- Consent calendar: The commission approved the June 10, 2026, minutes and the April and May revenue and expenditure reports (For: 6, Against: 0, Absent: 1, Vice Chair Anderson).
- Audit calendar: The citywide audit runs Oct. 5-16, and a street and road audit is also set for October. The Measure A audit is typically held in November and issued in December.
- Standing projects: Staff reported no significant updates on Silver Rock, the Highway 111 corridor or the IID substation. Staff is also upgrading its financial forecasting software ahead of a task force.
Looking Ahead
The commission meets next on Dec. 9, 2026, at 3:30 p.m. By then, it should have reviewed the Measure G compliance report and the fiscal 2025-26 year-end budget, both due in November.