Quarterly budget update: Red Bluff sees mixed sales-tax signals; staff warns water and sewer rates likely to rise

City finance staff on May 20 presented a quarterly budget and sales-tax update that included modest revisions to revenue projections and a warning about longer-term pressures on the city’s water and sewer funds.

Albert Wagner, staff member, reviewed the city’s general fund status and said the city originally budgeted about $13.5 million in general-fund revenues for fiscal year 2024–25. He said HDL’s local sales-tax report adjusted the city’s projections: staff summarized an estimated $99,227 change to current-year projections and a $46,520 adjustment for the next fiscal year, figures presented to the council as the basis for updated revenue estimates.

Wagner and other staff said the city has seen a positive final quarter for sales tax but remains cautious. Paul (staff member) told the council the city closed the prior year better than initial estimates and that HDL historically takes a conservative approach. Paul also said sewer operations are already negative and that staff expect the sewer fund will require rate increases; he estimated sewer rate increases could be substantial and noted a ballpark figure of “at least 50%” was discussed as a possible order of magnitude during the meeting.

Devin (staff member) outlined next steps on water and sewer planning: the city aims to adopt water and sewer master plans this summer, issue a request for proposals for a nexus study in the fall, and expects to have rate recommendations available in winter or spring 2026. Council members pressed for timing; staff said final fiscal-year impacts will be clearer after year-end closes, likely around September.

No formal council action was required for the presentation; the report prompted council discussion about the tradeoffs between capital needs and one-time uses of general-fund reserves, and about the role of sales tax and tourism in the city’s revenue mix.