TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Trang Nguyen, Finance Director
1. SUBJECT
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First Budget Study Session for the Proposed Fiscal Year 2026-27 Budget
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2. SUMMARY
??This is the first budget study session for the Fiscal Year 2026-27 Budget. This session presents revenue assumptions, the proposed expenditure budget, and budget-balancing measures for the General Fund.?
3. RECOMMENDED ACTION
recommendation
1. Provide direction to staff to prepare the Fiscal Year 2026-27 Preliminary Budget.
2. Review and discuss potential revenue measures.
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4. FISCAL IMPACT
Fiscal Impact will be determined with final budget adoption.
5. STRATEGIC PLAN GOALS
??Goal 2: Enhance Economic Development and Achieve Fiscal Sustainability
6. DISCUSSION AND BACKGROUND
??Background
?Fiscal Year 2026-27 (FY27) continues to present significant financial challenges for the General Fund, as the City faces an ongoing structural imbalance between revenues and expenditures. The City's largest revenue source, Property Tax, is expected to grow modestly within the constraints of Proposition 13, while Sales Tax revenues are projected to remain relatively flat. At the same time, costs across all major expenditure categories continue to increase.
Development of the FY27 Proposed Budget began with a zero-based budgeting approach, requiring departments to justify expenditures from the ground up rather than relying on prior-year spending as the baseline. This process resulted in proposed position reductions, continued vacancy controls, and the deferral of several lower-priority or non-core requests in order to align limited General Fund resources with the City's highest service priorities.
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?The FY27 Proposed Budget includes reductions totaling approximately 56 full-time equivalent (FTE) positions, reducing the City's workforce to 689.7 FTEs, or about 3% below FY26 and nearly 6% below FY24.
?Over the past three ...
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