Pacifica council reviews ‘bare‑bones’ FY2025‑26 budget and flags housing‑fund spending

Pacifica city staff on Monday presented a recommended fiscal year 2025‑26 budget the city manager called “one of the most challenging years,” asking the City Council for policy direction on roughly $820,700 in general‑fund program options and about $1.6 million in additional unfunded requests.

The budget presentation, led by City Manager Kevin Woodhouse and Assistant City Manager Yulia Carter with input from Administrative Services/Finance staff, framed the proposed plan as structurally balanced only after one‑time moves and by relying on revenue assumptions that remain uncertain, including vehicle license fee (VLF) “backfill” payments from the state. The staff recommended reductions or deferrals for several items and offered alternatives to fund some priorities if council chooses to do so.

Why it matters: The recommended budget preserves core services while postponing or trimming other work the council and staff have prioritized, including capital and equipment replacement. Several items—particularly actions tied to the Housing Action Fund and to state funding guarantees—could affect the city’s ability to meet housing goals and its long‑term fiscal stability.

City staff said the proposed budget includes an operating surplus of $57,109 after the recommended program changes and one‑time transfers. The proposal increases the city’s unassigned general‑fund balance to about $10.1 million (roughly 9.1% of operating expenditures), above the Government Finance Officers Association’s two‑month recommended minimum but short of a three‑month target staff referenced as ideal.

Major recommended program options in the general fund include a $150,000 one‑time Shoreline Adaptation Program allocation, a $100,000 one‑time development impact and cost‑recovery study, a $75,000 ongoing short‑term‑rental (STR) administration allocation, a $200,000 ongoing replenishment of the vehicle replacement (motor pool) fund and a $85,000 one‑time Climate Adaptation and Resiliency Plan (CARP) implementation request. Staff recommended postponing the city’s scheduled contribution to the PARS pension trust for the coming year (about $214,700) to help balance the budget and retained an OPEB trust contribution of roughly $283,000.

"I will say that, in reflecting back, I do feel like this year is one of the most challenging years," City Manager Kevin Woodhouse told the council, adding the recommendation tries to preserve services while shifting some work to later years.

Council members pressed staff for clearer accounting of Housing Action Fund uses after public commenters raised concerns that in‑fund payments were being used in place of producing affordable units. Assistant City Manager Yulia Carter and finance staff outlined requested Housing Action Fund items: a limited‑term economic/housing staffing package (roughly $246,000 for the first year as presented), $150,000 for a master planning of city sites to support housing, and $100,000 for on‑call technical services to implement the housing element. Staff also noted the fund carries current‑year contractual commitments, including payments to community programs such as a temporary safe‑parking arrangement administered by a nonprofit partner.

During public comment, a constituent who identified herself as Dinah Verby urged the council not to allow a developer of the 801 Fastler townhomes to substitute an in‑lieu fee for required below‑market units, saying, "I'm strongly opposed to that." Staff confirmed the city had issued a notice of violation to that developer and said details would be brought forward for council consideration.

Staff identified roughly $1.3 million in overdue vehicle and equipment replacement requests that are unfunded; the recommended budget proposes a $200,000 annual replenishment to the motor‑pool fund to begin rebuilding that reserve. The budget also lists $1.6 million in total unfunded general‑fund requests, including public‑works compliance training, an HR performance management system, streetlight maintenance and two additional staff requests the city manager did not recommend for the coming year.

The recommended budget treats a request from FogFest organizers for $25,000 as a community funding ask not included in the base budget; staff said the council could decide whether to fund the festival. Staff also described a three‑year, regional funding request from the San Mateo County Flood and Sea Level Rise Resiliency District (one Shoreline) for $120,000 and recommended—if the council were inclined—to fund only the first year while the city evaluates benefits to Pacifica.

Staff stressed that several revenue assumptions carry risk: the city is relying on $3.7 million in excess ERAF (Educational Revenue Augmentation Fund) transfers and on uncertain state VLF backfill payments (staff cited a prior year’s backfill of about $2.3 million). The recommendation includes a $600,000 one‑time transfer from the debt service fund to add short‑term relief.

What council asked next: Council members requested clearer, consolidated schedules showing Housing Action Fund commitments and asked staff to confirm current contractual obligations and the timing of one‑time versus ongoing costs. Several council members signaled hesitancy to make long‑term commitments from one‑time reserves and asked staff to return on June 23 with any changes for final adoption.

A public step: The council held this study session for direction; final adoption of the FY2025‑26 operating and capital budget and the citywide fee schedule is scheduled for the June 23 meeting.

Ending: Staff indicated they may revisit several items midyear if revenue conditions change and will provide refined cost estimates. The council did not take a final vote on the budget at the June 9 study session; members requested follow‑up information on Housing Action Fund line items, the status of the 801 Fastler enforcement action, and the potential fiscal impact of any funding requests for community organizations.