Yuba City council adopts 2025–26 operating and capital budgets, flags $6.2 million general-fund gap

The Yuba City Council voted 4-1 to adopt the cityfiscal year 202526 operating and capital budgets on the recommendation of interim City Manager Robert Bindorf and Finance Director Diana Pope.

City staff told the council the General Fund faces an estimated structural gap of about $6.2 million for 202526 and proposed a multi-part plan to close it that relies largely on 1-time sources and cost-control measures rather than new service reductions this fiscal year.

Why it matters: Council and staff said they intend to treat 202526 as a planning year: staff will bring additional revenue and structural options back to the council during 202527 and beyond rather than relying solely on one-time fixes.

Key figures and the plan presented by staff

- General Fund: FY 202425 adopted revenues were $56.3 million; staff estimates $56.4 million for 202526; estimated expenditures for 202526 are $60.626 million. - Budget gap: approximately $6.2 million in the General Fund. - Proposed one-time and near-term gap-closing measures presented by staff: use of about $5.0 million from reserves and discretionary funds; $489,000 from the workerscomp internal-service fund to cover rising workers' comp costs; about $75,000 estimated from a new credit-card transaction cost-recovery fee; and about $600,000 in projected interest earnings tied to previously received ARPA funds. - Positions and operations: staff froze 17 positions, asked for a hard hiring freeze to start September 1, reduced extra-help and professional development allocations, and identified $2.34 million in midyear reductions already taken earlier in the fiscal year.

Utilities and capital projects constraints

City presentations from Utilities and Public Works staff stressed constrained capacity for new borrowing and limited capital funding despite identified infrastructure needs.

- Water and wastewater: the utilities enterprise funds together generate roughly $40 million in annual revenue. The water system serves about 20,000 accounts; wastewater about 16,000. - Debt service: staff must maintain a 1.2 debt-service coverage ratio for water/wastewater to remain eligible for new loans. Because of tight margins, staff said the city currently cannot accept an SRF (State Revolving Fund) loan for a large wastewater outfall/diffuser replacement until the city meets coverage requirements; staff estimated $35 million in eligible SRF loans for that project but said the loan cannot be signed until coverage constraints are resolved. - Aquifer storage recovery (ASR): staff showed the ASR well construction in progress and proposed adding $3.8 million in the CIP toward well equipping and later-phase recharge infrastructure; that funding, plus grant prospects, will absorb a large share of available water CIP funds. - CIP totals proposed for FY 202526: roughly $6.38 million for water and about $3.09 million for wastewater; next-year CIP contributions will be small (staff estimated roughly $750,000 to $1 million available).

Council reaction and next steps

Mayor Dave Shaw and multiple council members repeatedly thanked staff for the level of detail and asked for a multiquarter monitoring cadence. Council members emphasized the need to combine expenditure reductions with new revenue options and to treat 202526 as a planning year for structural fixes rather than relying solely on one-time reserves.

The adopted budget motions included direction for staff to return with additional recommendations and quarterly updates; staff said they will evaluate revenue opportunities, further service redesigns and potential policy-level choices for council consideration.

Votes and formal action

The council voted 4-1 to adopt the FY 202526 operating budget, capital improvement program and the city's appropriations limit; Vice Mayor Boomgarden cast the lone "no" vote.

What remains uncertain

Staff explicitly identified limits tied to pension and health-care cost trends, potential volatility in chemicals and power costs affecting utilities, and the long-term nature of closing a structural deficit. Council and staff repeatedly distinguished adopted actions (formal adoption) from planned follow-ups (additional policy or revenue work).

Ending note

Council members directed staff to provide quarterly updates, tighten hiring controls beginning in September and return with specific revenue and expenditure alternatives for 202526 and beyond; staff said they will return with options in coming months.