South Gate reviews $7.5M structural budget gap; council weighs utility users tax and other options

South Gate city leaders presented a budget workshop that mapped a growing structural deficit and discussed a range of remedies, including a voter‑approved utility users tax (UUT), permit and fee updates, targeted cuts and workforce development programs.

Administrative Services Director Louis (Louis) and City Manager Rob Houston told the council the general fund has been propped up in recent years by about $18 million in one‑time federal ARPA funds, and with those onetime resources ending the forecast shows the general fund could become insolvent by fiscal year 2026‑27 unless the city takes corrective action. The forecast in the presentation projected a cumulative negative balance of $21.8 million by fiscal year 2028‑29 under current assumptions.

"The city has operated with a structural deficit since at least fiscal year 2019‑20," Louis said. He presented major cost drivers: unfunded pension liabilities (CalPERS) rising from roughly $6.1 million in FY 2019‑20 to $10.3 million in the FY 2025‑26 proposed budget; health insurance increases (from $3.3 million to $5.5 million); and general liability insurance increases that staff said more than doubled over the same period. Street lighting and landscape maintenance costs also rose, from roughly $627,000 in 2019 to about $1.58 million in the proposed budget.

Officials outlined revenue limits that constrain local options: only about 6.15% of a typical property tax dollar returns to the city and South Gate retains 2% of local sales tax…