Auburn presents roughly $36 million proposed budget for FY 2025–26; council discusses reserves, pension and CIP priorities

Finance Director Gretchen Johnson presented the Auburn City Council with a proposed budget for fiscal year 2025–26 and a multi-year forecast, saying the city is moving from two years of deficits to a modest surplus range and asking council for feedback ahead of final adoption on June 23.

Johnson told council staff estimate a general fund surplus in the roughly $418,000 to $550,000 range and recommended a 3% wage increase and modest benefit adjustments to support ongoing labor negotiations. She said multi-year structural adjustments and a hiring freeze implemented during the prior fiscal year had reduced city staffing from 98 to a proposed 79 full-time positions and generated more than $1.1 million of ongoing labor cost savings. "We still have a surplus that we're targeting in the range for the general fund of about 450,000 to 550,000," Johnson said during the presentation.

Major budget points and council concerns: - Reserves and pension: The budget formalizes a general fund reserve target at 25% of expenditures (about $4.9 million) and includes a $1 million placeholder to address the city's unfunded pension liability. Staff said it will return with options (pay CalPERS directly, set aside funds, or other alternatives) that outline pros and cons. - Staffing and personnel costs: The proposed budget includes a 3% wage increase estimated at about $300,000 and a staffing reorganization whose net new general fund cost is approximately $45,656; staff said permit revenues and planning fees are expected to offset part of the planning reorganization cost. - Enterprise funds and capital: The airport budget includes a one-time pavement repair project funded partly from airport reserves; the sewer enterprise fund shows planned capital work funded by reserves and user charges; the transportation/transit funds were discussed with attention to which state/local transportation funds can be used for bike and pedestrian projects. - Committee/commission fundraising and project approvals: Council raised process questions about whether committees should be able to begin fundraising for new projects without separate council approval and asked staff to return with a clarified procedure and, if possible, itemized balances for committee-held funds. - Asset forfeiture: Chief Morrison indicated the city expects to receive a portion of a federal asset-forfeiture distribution tied to a multiagency case and that the funds (restricted in use) will be reflected in a midyear update when finalized.

Councilmembers generally praised staff for addressing a multi-year structural deficit and asked for additional detail on pension-payment options, a clearer committee work-plan approval process, and a report on active-transportation funding (bike/ped) tied to the city's draft Active Transportation Plan. Johnson and the city manager said staff will return with the final budget on June 23 and follow-up materials on pension options, committee fund balances and the ATP funding picture.