Hermosa Beach adopts balanced FY 2025–26 budget; council votes to remove deputy city manager slot

Hermosa Beach City Council on June 24 adopted a balanced fiscal-year 2025–26 budget that programs $33.9 million in capital improvements and preserves a 20% general fund reserve, but the council voted 3–2 to remove a deputy city manager position from the staffing plan.

The budget presentation by Brandon, the city finance lead, said the plan is balanced and focuses on maintaining infrastructure and healthy reserves. “The good news is it is a balanced budget,” Brandon told the council as he outlined revenue and spending projections, including $18.5 million in carried-over capital projects and $15.4 million in new projects for the coming year.

Council members and staff emphasized the city faces out-year risks. Interim City Manager Steve Napolitano warned that contract increases from Los Angeles County and other inflationary pressures could widen projected deficits beginning in FY 2026–27. Napolitano said the council should reconvene the finance subcommittee to examine revenue options and potential expenditure reductions.

Budget highlights and immediate actions approved by the council include: - $33,900,000 programmed in the capital improvement program (CIP), consisting of $18.5 million of carryover and $15.4 million of new projects. - Maintenance and one-time allocations such as $100,000 earmarked for citywide beautification (unprogrammed pending subcommittee work) and $75,000 for Fourteenth Street beach restroom maintenance and rehab. - Continued general fund reserves at 20% of operating expenditures, above the common 16% guideline. - Direction to pursue a fee study and other revenue measures (parking rates, meter/dynamic pricing, parking citation adjustments, stormwater subsidy review) to address looming deficits.

Council debate and amendment

Councilmember Michael Keegan moved to approve staff recommendations (contracts list, preliminary budget and the proposed $90,000 transfer from an emergency action plan to CIP). During the meeting Councilmember Keegan offered a substitute motion that included removing the deputy city manager position from the FY 2025–26 budget. The substitute motion passed 3–2. The city clerk announced: “Motion carries by a 3–2 vote with Mayor Pro Tem De Toit and Council member Jackson voting no.”

Councilmembers who supported the substitute argued the position’s funding represents immediate salary savings during the transition to a permanent city manager; opponents said the deputy city manager has been a critical operational position and that eliminating it now could hamstring the incoming manager.

Implementation and next steps

Staff and council agreed to reconvene the finance subcommittee immediately to examine revenue options and to continue looking at expenditure efficiencies. Napolitano and Brandon flagged several items for detailed review, including the county contract cost exposure, rising insurance and pension costs, and a large and growing unfunded CIP need—estimated in the presentation at about $160 million.

The council also approved administrative contract awards included in the budget packet and directed staff to return with fee-study results and other recommended revenue strategies in coming months.

Ending

The adopted FY 2025–26 budget preserves current services while earmarking funds for infrastructure; however, council members said additional policy choices on fees and other revenue sources will be required in the near term to address projected out‑year deficits.