Chair Waters opened debate on a set of competing operating-budget floor drafts, including a hand-carried draft that would set aside general-fund cash to a provisional sewer account.

The matter drew public comment and extended exchanges among council members and department officials. Natalie Wasa, testifying during public comment, said, "I oppose the FD1 that Chair Waters just read ... here we are looking at $19,100,000 in a provision for sewer activities." She argued using cash instead of bonds could jeopardize the city's bond rating and make the move "not good fiscal policy."

Council member dos Santos Tam explained his own floor-draft changes and the committee's versions before the council discussed specific re‑allocations. Budget chair and other members described proposals that would repurpose vacancy balances across several departments to fund new council priorities; one floor draft listed more than $8.5 million in council-directed additions including data‑science support, federal grants coordination, community‑policing teams, park improvements and ocean‑safety items.

Administration officials and department directors warned that repurposing vacancy funds can constrain hiring and operations. Andy Coano (Budget & Fiscal Services) testified that some departments would see significant cuts to salary funding under one draft and that those cuts could require departments to prioritize which positions to fill. Coano said the budget committee's draft replenished some previously cut positions but that using vacancy savings to fund the sewer provisional would reduce funds available for departments.

Council members pressed the administration about the legal and fiscal consequences. Roger Babcock, director of Environmental Services, said the city has flexibility to sequence cash-funded vs. bond-funded CIP projects and that some project sequencing changes could moderate the immediate cash requirement for sewer capital work. But he did not provide a guarantee that sequencing alone would cover the proposed provisional amounts.

After extended debate and public testimony, the council did not vote on the operating-budget measure and instead agreed to postpone the item to the end of the calendar for further work and drafting of written floor drafts by OCS. "Seeing none. Okay. So ordered. We put this at the very end of the calendar," the chair said when members agreed to delay action.

The discussion left several points unresolved: the council must decide whether to fund some sewer activity with general‑fund cash or bonds; how much of the one‑time vacancy savings to repurpose; and which department personnel or programs would be cut or restored if the council repurposes lapsed salary balances.

Looking ahead, council members said they will continue to weigh the operating budget drafts, seek written amendments from OCS, and coordinate with Budget & Fiscal Services and affected departments before making a final decision at the calendar's end.