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Council adopts budget development policy, directs two‑year planning steps
Summary
The council approved a budget development policy and directed staff to pursue a two‑year budget planning approach, centralize the process in the city manager’s office, and return in mid‑year with a recommended deficit tolerance for the second year.
The Sacramento City Council voted Tuesday to adopt budget development policies intended to centralize the process in the city manager’s office, require departments to submit reduction options and to provide a framework for a two‑year approach to addressing the city’s structural deficit.
Pete Coleto, the city’s finance director, told the council that "we're still in structural deficit" and outlined a multi‑option approach staff had presented to the Budget and Audit Committee, including (1) balancing the budget in year two of the forecast, (2) setting a maximum deficit percentage for year two, or (3) retaining the current single‑year focus. Coleto said departments would be asked to provide reduction options equivalent to 15% of their net general fund usage to give the council a broad set of choices.
Why this matters: staff presented a general fund forecast showing a significant gap in fiscal year 2026–27 and emphasized that prior actions narrowed a previously larger shortfall but left structural issues to address. The council directed staff to centralize the process, publish reduction options for public review and return at mid‑year (late January/early February) with recommendations, including a proposed tolerance for any second‑year deficit.
Council discussion focused on balancing flexibility with fiscal discipline. Several members favored option 2 — adopting a year‑plus‑one target or tolerance — while others urged caution about setting a specific percentage now and recommended returning after departments’ reduction proposals are analyzed. Councilmembers also asked staff to better coordinate with boards and commissions (including Measure U) so those bodies can provide timely input.
Formal action and implementation: the council’s motion to approve the budget development policy and direct staff on two‑year budgeting and council amendment best practices passed by voice vote; staff said they will return with mid‑year information and a suggested deficit tolerance for the second year. The council’s direction allows for amendments and urgent mid‑year adjustments if necessary.
Outcome: motion approved (voice vote); minutes record the measure as passing with no recorded no votes.
