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Folsom council adopts FY 2025–26 budget using reserves; council signals more cuts and reviews ahead
Summary
By unanimous vote the council adopted Resolution No. 11,401 approving the FY 2025–26 operating and capital budgets, using general fund reserves to cover a projected shortfall and directing staff to produce additional cost-cutting proposals and to return for midyear reviews.
The Folsom City Council on June 24 adopted the city’s Fiscal Year (FY) 2025–26 operating and capital budgets by approving Resolution No. 11,401. Staff described a structural shortfall that will require use of general fund reserves in the coming year while the city develops further cost-reduction measures for subsequent budgets.
Stacy Timani, the city’s chief financial officer, presented a condensed budget summary. Staff projected roughly $120 million in general fund revenue for FY25–26, an overall revenue increase of about $4.7 million from last year driven primarily by property tax growth related to development in the Folsom plan area. However, projected increases in salary, benefits and insurance (about $5.5 million) plus department operating “true-ups” created an expenditure total above available revenues.
The city manager proposed a set of adjustments including a $3.0 million increase to departmental operating lines to more fully fund ongoing costs and a set of proposed reductions to limit reserve use. After those reductions (including eliminating a skate-park attendant, saving $25,000, and deferring an annual contribution to the city retiree health trust of $427,000), staff estimated using about $3.0 million from the unassigned fund balance for the FY25–26 budget. That would leave the emergency reserve near $19.1 million or about 15.5% of expenditures — below the city’s stated 17%–20% policy range.
The adopted budget also separates certain capital items into newly created capital funds (fleet, IT, fire and police equipment funds). Transfers out to those funds increase by about $1.6 million to support capital spending; the manager proposed several one-time capital projects funded from an existing capital fund, including library roof and HVAC work and fleet shop repairs totaling roughly $3.6 million. Staff emphasized those capital funds are one-time or earmarked balances rather than new ongoing revenue.
Council discussion focused on strategies to reduce structural deficit pressures — including vacancy management, evaluating city-owned properties for alternative stewardship or partnerships, reengaging prison labor for some maintenance tasks, and broader community engagement on priorities. Several council members asked for a clear, public process to identify core services and to revisit the budget after actual revenue and final fiscal-year closeout numbers are known. Staff said they will return with department-level cost-reduction proposals through July–September and hold a midyear review in February–March to consider further adjustments.
The council unanimously adopted Resolution No. 11,401. Members said they value transparency and urged staff to return with additional options for reductions and revenue measures; staff reiterated the city intends to minimize service impacts in the immediate year while taking a multi-month approach to structural fixes.
