Finance projects smaller near‑term gaps; city presents five interim savings measures

City finance on Feb. 25 delivered an updated general‑fund forecast and a staff package of interim actions intended to reduce near‑term budget pressure ahead of the 2026–27 budget cycle.

Mark Manning, Director of Finance, said preliminary reassessments from the county indicate stronger assessed valuation growth than previously budgeted and that interest earnings remain higher than earlier forecasts. He told the council the new estimate materially improves the short‑term outlook: “The short takeaway is our positioning is improved,” Manning said, but he cautioned that longer‑term structural gaps remain and that the forecast will change as county valuations are finalized.

Manning and staff identified court fines and penalties as structurally lower than historic levels and described the city’s reliance on interest earnings and AV growth to offset wage and operational cost pressures. The finance director said assessed valuation estimates will be finalized mid‑June and the city’s revenue‑neutral rate decision is due in July. He presented a draft budget calendar with the manager’s proposed budget scheduled for July 15 and budget adoption on Aug. 26.

City staff proposed five interim initiatives — developed after the 2025 budget adoption — to capture early savings and improve the 2026–27 outlook. The five recommendations staff described at the workshop were:

• Municipal court adjustments: eliminate one docket clerk and two clerk positions tied to workflow changes and reduce outside collection professional services, generating roughly $263,000 in 2025 savings through automation and lower collection activity. Staff emphasized these position changes follow observed declines in traffic and court activity and workflow improvements from new police records systems expected later.

• Park and recreation mowing cycle: extend non‑park rights‑of‑way mowing from 14 days to 21 days (and similar cycle adjustments) to realize about $260,000 in annual savings; staff noted current drought and non‑irrigated rights‑of‑way reduce near‑term impact.

• Planning fee cost recovery: increase planning and development review fee recovery (staff proposed a 10% increase as one option) to recover a larger share of the roughly $1.5 million annual cost to process applications; the immediate revenue estimate for a 10% increase was approximately $34,000.

• Facilities custodial reduction: eliminate three vacant custodial positions and reduce some contract custodial services to lock in about $387,000 in savings while aligning expectations for building upkeep.

• Street maintenance realignment: target nine positions for elimination, six of which are currently vacant, by freezing vacancies and reorganizing work; staff estimated roughly $600,000 in annual savings but warned some noncritical services — street sweeping cycles, graffiti and litter removal — would slow and that pothole and signal work would be prioritized.

City manager and department leaders said the intent is to capture savings with minimal immediate impact to core services while acknowledging some quality‑of‑life services could see longer cycles. The city manager asked council for policy guidance on the budget framework and whether staff should prepare alternate scenarios. Several councilmembers requested staff produce a base budget and an alternate that includes CPI (cost‑of‑living) plus new construction growth, and some asked for an additional option showing a one‑ or two‑mill levy increase so the council and public can compare service tradeoffs.

Councilmembers split on a mill levy increase; some said all options should be prepared for transparent public debate, while others indicated they would not support a mill‑increase option. Finance staff said any mill‑increase scenarios would be modeled and that the July 15 manager’s proposed budget and the required revenue‑neutral rate decision would inform final decisions.

Staff will continue refining revenue projections, modeling the council’s requested budget scenarios and returning with recommended budget proposals later in the spring and summer.