City Council examines $2.9M budget deficit for fiscal year 2025-2026

The Special City Council Meeting held on May 7, 2025, in Orange County, California, focused on significant budgetary concerns for the upcoming fiscal year 2025-2026. The council discussed updated projections for sales tax revenue, which have led to a revised budget deficit estimate.

During the meeting, it was confirmed that the projected recurring annual revenue for the fiscal year 2025-2026 is now expected to be $125.6 million, a decrease from the previously reported $127.4 million. This adjustment has resulted in a budget deficit of $2.9 million, significantly higher than the earlier estimate of $1.1 million. The updated figures were attributed to late-breaking sales tax information from HDL, which highlighted a reduction in expected sales tax revenue.

Council members expressed concern over the implications of these changes, noting that if the accurate sales tax projections had been available a year earlier, the city would have faced a budget deficit in the previous fiscal year instead of a surplus of $200,000. The discussion also included adjustments to operating expenses, which have been reduced by approximately $5.8 million.

The council emphasized the importance of understanding these financial challenges as they plan for both short-term budgets and long-term fiscal health. The meeting underscored the need for careful financial management and transparency in revenue projections to avoid future budgetary surprises. Further discussions on strategies to address the budget deficit are expected in upcoming meetings.