REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, City Manager
PREPARED BY: Zack Zithisakthanakul, Acting Chief Financial Officer
Subject:
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Study Session: Fiscal Year 2026-27 Proposed Budget Review
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Statement of Issue:
The City Charter requires the City Manager to submit a proposed budget to the City Council at least thirty days prior to the beginning of each fiscal year. Following review and any revisions deemed appropriate, the City Council is required to hold a public hearing on the proposed budget at least fifteen days prior to the start of the fiscal year.
The Proposed Budget for Fiscal Year 2026-27 is hereby presented for City Council consideration. This item was brought forward to the City Council on May 5, 2026, earlier than in prior fiscal years, to allow additional time for review and discussion by the City Council, Finance Commission, and the public in advance of the scheduled Budget Study Session on May 19, 2026, and the Finance Commission Special Meeting on May 13, 2026.
Financial Impact:
A proactive Budget Balancing Plan was implemented as part of the Fiscal Year 2026-27 Proposed Budget to address an anticipated budget deficit. The plan identifies a combination of expenditures reductions, revenue adjustments, one-time solutions, and use of reserves.
The proposed Citywide total resources and total expenditures budget for all funds is approximately $590.0 million, subject to refinement prior to budget adoption. The General Fund proposed resources and expenditures budget totals approximately $327.3 million.
While the proposed budget is balanced for Fiscal Year 2026-27, ongoing cost pressures, including CalPERS Unfunded Actuarial Liability (UAL) and increases to personnel and operating costs, continue to impact the City’s financial outlook. At the same time, revenue growth is moderating and is not expected to keep pace with expenditure growth.
Recommended Action:
recommendation
A) City Council receive the Proposed Budget for Fiscal Year 2026-27; and,
B) Set the date for adoption of the City budget as June 2, 2026. A meeting date of June 16, 2026, is set as an alternative should the City Council require additional deliberation to approve the budget.
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Alternative Action(s):
Do not approve and direct staff accordingly.
Analysis:
Adoption of the City Budget is the most important decision that the City Council is required to make each year. The City Budget establishes funding for every City program and service. It is the roadmap that guides the City for the upcoming fiscal year.
Staff is presenting an overview of the proposed Citywide budget, with a primary focus on the General Fund, which supports core City services including public safety, public works, parks, and recreation.
Throughout the current fiscal year, staff has provided periodic updates to the City Council regarding the City’s financial condition. Based on current projections, the City continues to face structural budget pressures driven by expenditure growth outpacing revenue growth. The presentation will provide an overview of the strategies used to develop a balanced budget for Fiscal Year 2026-27 and identify policy considerations and options for addressing future structural imbalances.
Environmental Status:
Not Applicable
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. Fiscal Year 2026-27 Proposed Budget
2. Fiscal Year 2026-27 Capital Improvement Program