Yuba City council adopts 2025–26 operating and capital budgets, taps reserves to close $6.2 million gap

The Yuba City Council voted 4–1 to adopt the city's fiscal year 2025'26 operating budget, capital improvement program (CIP) and the city's appropriations limit, approving a plan that draws on reserves and one-time funds to close an estimated $6.2 million shortfall.

City managers and department staff presented a multi-part plan that relies primarily on roughly $5 million from reserves and discretionary funds, plus $489,000 from internal workers'compensation reserves, a proposed $75,000 revenue lift from a credit-card processing fee, and about $600,000 in projected interest earnings on ARPA monies to narrow the shortfall.

The budget matters because it covers core services including public safety (about 63% of the General Fund), water and wastewater operations, and a multi-million dollar CIP for streets, parks, water and wastewater projects. Council members and staff warned that the plan is a near-term approach: departments will face hiring freezes and service redesign work this year while longer-term revenue and structural solutions are developed.

City manager Robert Bindorf and finance director Diana Pope led a detailed presentation that showed estimated discretionary General Fund revenues of roughly $56.4 million for 2025'26 and total proposed expenditures in the mid-$60 millions range. Bindorf told the council that staff had already identified roughly $2.34 million in reductions earlier in the current year and credited department leaders with further line-by-line cuts. "They all have the city's best interests at heart, and they're looking at making do with what we have," he said.

Pope outlined the main components used to close the gap: the roughly $5 million draw from reserves/discretionary funds, the $489,000 from the workers' compensation internal service fund to cover increased costs, the $75,000 from the proposed cost-recovery fee on credit-card transactions, and $600,000 in projected ARPA interest earnings. She also noted that departments identified capital and equipment needs; the proposed budget includes $722,000 from the vehicle replacement fund for general-fund vehicle and equipment replacements and $165,000 for wastewater.

Utility managers warned that the water and wastewater enterprises face tighter constraints. Utilities staff said the water fund benefited from a recent rate increase and some unusually strong one-time revenues (including a water sale to the San Gorgonio Pass area), but that an aging water system still requires ongoing investment. The council was told that the aquifer storage and recovery (ASR) well project is underway (initial drilling awarded and in progress) and that the city expects to program $3.8 million to the ASR effort in the CIP.

On wastewater, staff described mounting nondiscretionary cost pressures, especially power and biosolids disposal. The debt-service coverage ratio required to take on new debt remains thin; staff said the city currently cannot execute the State Revolving Fund (SRF) loan for the outfall diffuser replacement because the paper-based debt-service ratio would not meet lender thresholds. Josh Wolf, the CIP presenter, said permitting and financing work on the outfall diffuser continues and that the city is pursuing SRF funding and grant reimbursements, but final loan execution remains contingent on improving the enterprise'fund metrics.

Council members pressed staff for additional detail on revenue options and cost-control measures. Council Member Cole asked for clarification about utility revenue swings; Diana Pope and utilities staff explained that certain one-time receipts were not being budgeted as recurring revenue. Vice Mayor Boomgarden cast the sole no vote on the budget motion, saying aloud at roll call, "No. With the proviso that I mentioned, I support you, staff." Mayor Dave Shaw, in closing remarks after the vote, urged a collaborative approach and called the year ahead "a year that's built on collaboration and trust."

Votes at a glance - Consent calendar (items 5'14): Motion to approve items 5'14 passed; clerk recorded multiple tallies to reflect recusals (see actions). - Fiscal year 2025'26 operating budget, CIP and appropriations limit: Adopted 4'1 (Ayes: Mayor Dave Shaw; Council Members Cole, Kirschner and Pasquale; No: Vice Mayor Boomgarden).

What the council approved in CIP and near-term capital programming - The proposed CIP programs roughly $6.35 million for water projects (including the ASR well funding), about $2.95 million for wastewater projects, roughly $5.58 million of streets and roads programming, and smaller allocations to parks, facilities and public-safety capital needs. - Notable items: Walton Avenue reconstruction (design/advertising aimed for construction in 2026); Garden Highway reconstruction design; an ASR well drilling and equipping program in progress; planning and permitting funds for the wastewater outfall diffuser project (SRF loan eligibility in progress).

Near-term operating impacts and staff direction - Departments have frozen 17 positions and propose a hard hiring freeze to begin Sept. 1 unless otherwise directed. - The SAFER grant for fire staffing will move to a cost-share model after May; the city expects it will require a local match going forward. - City staff will continue quarterly budget updates and will bring options for service redesign, revenue measures and other structural solutions over the coming year.

Why it matters for residents - The budget preserves core services in the short term but relies on one-time funds and reserves; staff and council said further structural revenue actions or service redesigns will be required to avoid recurring deficits. - Enterprise funds (water and wastewater) are under constraint: the city said expected CIP contributions in 2026'27 will be limited and that critical projects will require continued pursuit of grant and loan funding.

Ending note Council members directed staff to return with quarterly updates and asked departments to continue identifying cost-savings and revenue options. The council adopted the resolutions and will monitor the plan as departments implement hiring controls and capital priorities.