Palm Springs council adopts 2025–26 budget after cuts and new economic-development funding

The Palm Springs City Council on June 25 approved the city's biennial 2025'26 budgets with amendments that shrink certain operating expenditures and add one-time and ongoing funding for economic development.

Council action followed a presentation by Chris Mooney, the city's finance director, who said revenue adjustments and departmental spending reductions turned earlier projected deficits into a small surplus for 2026. "We are now showing a surplus of about $3,700,000 in '26," Mooney told the council during his report.

The adopted package matters because it funds core services, backs Measure J capital projects, and preserves multi-million-dollar reserves that city leaders flagged as critical for the city's credit ratings and long-term obligations.

Mooney told the council staff increased expected fee revenue tied to an anticipated fee-study update and large permit projects, and modestly raised line items for property and cannabis taxes. On the spending side staff recommended shifting some vehicle purchases and deferred-maintenance projects into Measure J, using Measure J and Quimby funds for selected park work, and moving six public-safety positions temporarily to safety-augmentation funds to reduce the general-fund payroll burden by about $1.9 million for one year. Council also asked for a $100,000 increase to the economic-development budget; during debate the council amended the package to add a larger economic development allocation and other targeted reductions.

Key numerical changes described by staff: - Contract with a fee-study and other changes increased fee revenue by about $900,000 in FY26 and $1.3 million in FY27. - Utility users tax was adjusted to a run rate of roughly $11 million annually; motor-vehicle-in-lieu (property tax) expectations were increased by about $1 million. - Measure J was re-scoped to fund $5.2 million in projects in FY26 and roughly $4 million in FY27; $2.8 million in public-safety vehicles were shifted into Measure J funding. - Council-directed cost controls targeted about $560,000 in operating reductions across departments (20% travel/training cuts except for public safety, reductions in materials/supplies and repairs/maintenance).

Council debate highlighted differing views about risk and timing. Several council members and members of the public warned about underlying structural pressures: rising pension costs, uncertain tourism and construction revenues, and forecast volatility. Public commenters and some council members urged greater caution and deeper structural cuts; others argued that moving projects into Measure J and protecting set-asides would preserve the city's ability to invest in long-term economic growth.

The council also changed how some reserves and one-time payments are handled. The adopted plan preserves a substantial unassigned fund balance (staff projected an ending unassigned balance near $55.9 million for FY26 after the package) and includes an additional large CalPERS prepayment that staff reported had already been wired to reduce the city's unfunded retirement liability. Council directed staff to provide quarterly financial forecasts and to return with follow-up items as needed.

The final vote adopted the budget with the amendments described above. The council also passed related budget resolutions (successor agency, appropriations limit and associated items) later in the meeting. At least one council member said they could not support the package as amended and expressed concern about reliance on revenue assumptions; council discussion emphasized the plan will be monitored and adjusted through quarterly forecasting if revenues soften.

The action funds public safety and capital projects (including design money for the convention center and fire station), maintains the city's reserve policy, and adds a new economic-development allocation intended to support recruitment of private investment and job-generating projects. Staff and council members said they will return with additional detail and a formal economic-development strategy for council review.

What's next: staff will publish the final budget documents and provide quarterly financial updates to the council; the economic-development office will prepare a strategic plan and report back with proposals for how to deploy the newly allocated funds.