Pacifica council adopts balanced FY 2025–26 budget, flags long-term revenue shortfalls

The Pacifica City Council on June 23 adopted the city's fiscal year 2025'26 operating and capital budget after staff presented a document the city manager described as "facing Pacifica's financial and operational realities." The council voted unanimously to approve the budget and related resolutions, including the GANN appropriation limit, a citywide fee schedule and the city's annual investment policy.

Nut graf: The budget keeps existing services and presents one-time measures to balance the 2025'26 budget but makes clear that sustained city services will require substantial new and ongoing revenue. City Manager Kevin Woodhouse said the city faces an estimated $8 million gap in annual operating revenue to reach peer staffing and compensation levels and roughly $200 million in one-time capital needs for streets, coastal infrastructure and other facilities.

City Manager Kevin Woodhouse told the council the transmittal letter framed the budget as "balanced, transparent, accountable, prudent, and maintains critical programs and services for the Pacific community" but repeated a stark warning: "to achieve average staffing and compensation levels of peer agencies in the region, Pacifica would need to generate roughly $8,000,000 more in annual operating revenue." He and staff outlined a menu of long-term revenue options including new housing and mixed-use development, additional hotel capacity and targeted voter measures.

Finance staff presented the numbers backing the proposal. The general fund revenue and expenditures are both presented at about $53.1 million for 2025'26; the staff report shows a remaining one-time balance of approximately $42,000 and an undesignated fund balance of $10.1 million, equal to about 19.1% of operating expenditures. The capital improvement program for 2025'26 totals $22.7 million, including 34 projects and 15 new projects at a combined cost of about $6.7 million.

Assistant City Manager (Carter) and Finance Director Marisol Gomez described adjustments made after the June 9 study session: reallocating a library outreach project to the library fund, funding a $25,000 FogFest contribution, a one-year $40,000 shoreline contribution, and returning about $300,000 to the housing action fund after tighter review of carryover items.

Staff and council also highlighted recent budget-document awards: the budget received recognition from the Government Finance Officers Association and the California Society of Municipal Finance Officers for budget presentation and transparency. Gomez thanked the finance and budget teams and noted the city will continue refining the document and present additional analysis at midyear and in an upcoming revenue study session.

Council discussion focused on the limits of the adopted plan. Council members asked about the vehicle license fee (VLF) backfill and reserves: staff explained the budget assumes state VLF backfill revenue but also assigned $2.3 million as a contingency reserve in case that funding is not delivered; if the state does not provide the backfill, staff would seek midyear appropriations from the reserve. Council members also asked for expanded reporting on long-term debt and for clearer fund-balance tables to show amounts available for housing or capital projects.

The council approved staff'recommended resolutions by roll call vote: motion by Councilmember Beier, second by Councilmember Wright; the vote was unanimous. Vice Mayor Christine Bowles presided in Mayor Mara Beckmeier's remote absence during parts of the meeting.

Ending: Staff said they will bring forward a revenue strategy study session in late summer to explore development, business-support and funding strategies the memorandum named as necessary for long-term fiscal sustainability.