McFarland council adopts 2025–26 budget as reserves stay below policy target

The McFarland City Council on June 23 adopted a $6.8 million general fund revenue budget for fiscal year 2025–26 and approved a five‑year capital improvement program that relies heavily on grant funding to carry out road, water and sewer projects.

City staff told the council the projected unassigned general fund balance will be about $1.5 million, or roughly 14% of operating expenditures at the end of next fiscal year — below the city’s stated reserve target of 35%.

City staffer Diego Vida Montes presented the budget and said recent local measures (Measures M and O) and secured grants have helped stabilize finances, but the city still needs long‑term solutions such as additional commercial and residential development and continued organizational review. “These revenues which were not in existence beyond three years ago have been significant toward helping us balance our budget,” Montes said.

The budget packages for major enterprise funds show the water fund expecting about $10.6 million in revenues and $10.8 million in expenditures next year, leaving an unrestricted balance of roughly $479,000 (about 19% of operating expenditures). The sewer fund projects approximately $2.2 million in revenues and $2.2 million in expenditures with an ending unrestricted balance of about $409,000 (approximately 20% of operating expenditures). Staff credited recent grant awards for reducing immediate pressure on the water fund after a nitrate contamination response at the Browning Road well.

Council members and staff reviewed recent one‑time emergency costs that affected reserves: an emergency repair at Lagoon 1 that cost the sewer fund about $400,000, and costs associated with temporary water treatment while the Browning Road well replacement moved forward. Montes said the city is pursuing additional grant opportunities through the State Water Resources Control Board’s state revolving fund program and will consider long‑term financing if grants are insufficient.

Council discussion highlighted staffing and capital priorities carried forward into the CIP. The city’s five‑year capital program includes multiple road rehabilitation projects in construction and design phases, a large grant‑funded replacement of the Browning Road well, and water and sewer system investments planned over the coming years.

The council approved the budget by roll call vote (ayes: Marion, Vice Mayor O’Connell, Councilor Gonzales, Councilor Perez, Councilor Gutierrez). Vice Mayor O’Connell and others thanked staff for extensive workshops and for preparing a budget the council described as responsible.

The council directed staff to continue pursuing grant funding and long‑term revenue options and to return with updates as projects advance.