Arroyo Grande adopts biennial FY2025–27 budget, directs 25% to capital improvements

The Arroyo Grande City Council on June 10 adopted a biennial operating budget for fiscal years 2025'27 that city staff said relies heavily on sales and property taxes and directs roughly 25% of general fund resources to capital projects.

The budget was adopted by roll call vote after a public hearing. Director of Administrative Services Nicole Valentine presented the plan and told the council that "sales and property taxes comprise the largest source of revenue in the general fund, together accounting for approximately 73% of revenue in that fund." She recommended adoption and asked the council to determine that approving the budget is not a project subject to the California Environmental Quality Act.

The nut graf: the adopted plan funds operations while reserving a substantial share of resources for infrastructure. Council members said the budget reflects voter support for Measure E and positions the city to complete deferred maintenance and prioritized capital projects.

City staff described the proposed consolidated general fund expenditures as $35.6 million for the first year and presented consolidated totals of about $55.7 million for FY2025'26 and $55.4 million for FY2026'27. In staff presentations, the capital improvement program (CIP) is the single largest function, representing about 25% of the general fund budget; the police department was shown at roughly 22%, fire services at 12%, public works 10% and community development 6%. Non-departmental items such as insurance and transfers made up about 9%.

Council members praised staff for the multi-month preparation and public outreach. "Thank you to the voters for having faith in voting for Measure E because this is a great opportunity," Council Member Lowe said, adding that the measure gives the city new revenue to deliver projects. Council Member Marbella said she was "excited to see that 25% is going towards capital improvements that are really, really needed." Council Member Guthrie called the budget "an extensive" effort and said the 10-year CIP gives a clear picture of the costs to maintain city assets.

No members of the public spoke during the budget hearing. Director Valentine said the city will produce a more accessible budget book with infographics and return it as a receiving-file item on a future consent agenda.

The council voted to adopt a resolution approving the FY2025'27 biannual budget, making appropriations for the amounts budgeted and determining that adoption is not a project under CEQA. The motion passed by roll call (Guthrie: yes; Seacrest: yes; Lowe: yes; Marbella: yes). Mayor was absent.

Less critical details: staff noted that the planning commission found the CIP consistent with the general plan on June 3, and staff highlighted that dependence on two tax sources (sales and property taxes) increases the city's financial sensitivity to economic swings. Director Valentine closed by saying she was available for questions.