Council reviews draft FY 2025–26 budget: staff warn pro‑fund drawdown could exhaust recovery funds by 2040 without course change

Council members received a multi-department presentation of the draft fiscal year 2025–26 budget, hearing details on capital projects, staffing, revenue assumptions and recovery fund projections.

Finance staff presented the draft all‑funds budget and long-range model. “Our budget is being put out before you,” presenter Amy told the council, and she walked members through historical totals and the proposed figures. Staff said prior years showed large swings tied to capital transfers and grant‑funded projects; the draft FY 2025–26 all‑funds budget presented to council totaled about $134 million, a figure that includes multiple capital projects and transfers.

Staff summarized historical and current metrics: the town reported about 103 budgeted positions previously and now roughly 100.4 full‑time‑equivalent positions; population estimates used in the model rose from roughly 4,200 earlier to more than 11,000 in a recent Department of Finance count referenced by staff.

On reserves and pro‑funds, staff reported stronger market returns than previously anticipated: the town’s assigned ProFunds balance as of June was about $161 million (above an earlier projection of $141 million). However, staff said that at current spending levels the model projects assigned ProFunds could be exhausted by 2040. If the council and staff begin a planned “transition” phase of reduced spending, staff said a longer horizon—cited in the presentation as 2053—remains possible. Staff also gave a working date of 2029 for when the transition phase might begin, noting those projections do not automatically include future negotiated salary or benefit increases.

Departments highlighted projects and near‑term actions:

- Recovery & Economic Development: staff said phase 2 of the Category 4 tree removal program is underway and expected to wrap up in about September; the residential ignition‑resistant rehab (FEMA hazard‑mitigation) program has 11 homes completed; downtown plan phase 3 and a utility‑box mural program are starting; staff recommended continuing advocacy on insurance issues and proposed a $25,000 budget allocation to the Rebuild Paradise Foundation to support insurance outreach, subject to a formal agreement with measurable outcomes before funds are disbursed.

- Public Works / Engineering: staff reported 29 active projects across 18 funding sources totaling about $67.7 million for the fiscal year, and they outlined a multi‑year capital forecast. Road rehabilitation goals include delivering roughly 30 miles of paving in the calendar year window; the town has crossed the 50% threshold of its street rehabilitation plan. The Paradise Sewer Project alternatives analysis is nearing public review; staff scheduled two community presentations (July 24 and Aug. 14 at 6 p.m.) to present details and collect comment. Staff said a recent grant application for storm‑drain resiliency could yield roughly $4–6 million if awarded.

- Police and Animal Control: presenters said sworn staffing is fully filled at the moment, that a school resource officer (SRO) position MOU is updated with deployment around July 28, and that the department will receive a converted vehicle for the SRO. Animal control staff reported an expansion and remodel near completion with a planned fall grand opening.

- Fire Department: presenters cited the four‑year cooperative agreement recently approved by council as a major budget driver; staff expect delivery of a new engine (Engine 382) this fall and requested about $55,000 to upfit the vehicle. Older engines will be rotated to reserve status with plans to surplus or auction older apparatus.

- Community Development and Building: staff said the department is moving to new permitting software (live for two weeks at the time of presentation) to enable online submittals, is scanning 11,000 parcel files into digital records (nearing completion), and anticipates the Jan. 1 adoption of the next three‑year California building code cycle. The department also described organics collection implementation planned for fall 2025 to meet state requirements.

- Housing: staff reported the first‑time homebuyer program remains active, reconstruction/rehab funding is winding down as some post‑disaster funds phase out, and multiple affordable multifamily projects are advancing: about 47 units already leased, roughly 103 units becoming available in FY 2025–26, and about 142 units entering construction this fiscal year. Staff described a new infill construction program being developed with the California Department of Housing and Community Development to support new units.

Council members asked for additional detail on consulting and contract spending; members requested a cross‑reference list of consultants and anticipated contracts. Staff said most consultant fees appear in project‑specific funds rather than in the general fund and offered to provide transactional backup and a line‑item crosswalk. Staff also proposed a midyear review of general‑fund revenues and expenses to give council an ongoing pulse between budget cycles.

No budget adoption vote was held; staff said the formal budget adoption hearing and resolutions are scheduled for July 8. Staff emphasized that many large projects are grant‑funded and that project cash flow, investment timing and transfer schedules will affect how much the general fund is used to bridge initial payments.

Council discussion touched on the need to plan now for a future “transition” from recovery spending to stabilized ongoing operations, and several council members asked staff to provide digestible recurring reports so council can monitor progress toward the long‑range targets.