Hayward Council adopts 2025–26 budget with $8.9 million projected shortfall; fall revisions planned

The Hayward City Council on June 17 adopted the fiscal year 2025–26 operating and capital improvement program budgets and related appropriations while also approving an addendum that narrows the projected general-fund shortfall to $8.9 million.

The council voted unanimously to adopt the budget package as amended. Interim finance director Shreef Etman told the council the work of the executive team and department managers yielded about $7.2 million in one-time reductions and transfers, lowering a previously projected $16.1 million shortfall to $8.9 million for the coming fiscal year.

The addendum included transfers from Route 238 property funds, vacancy-management savings, reductions in planned transfers for fleet capital and IT software, and other one-time measures. Etman stressed most of the measures are one-time and that longer-term structural changes — including negotiations with labor groups and possible service-level changes — will be considered in the fall revised budget and at midyear.

Acting City Manager Lawson said the executive team will continue outreach and negotiations with labor partners to address recurring salary-and-benefit costs that make up roughly 80% of the general fund. "There's no magic bullet in this. You can't just revenue your way out of this. You can't just expense your way out of this," Etman told the council, describing the need to examine staffing and service levels.

Council members from across the dais praised staff for the revised package and emphasized the need to protect core services while seeking savings from overtime, vacancy management and other efficiencies. Several council members urged continued focus on economic development programs, saying those efforts help generate jobs, sales tax and other revenue.

The council approved a friendly amendment to the budget resolution that explicitly adopts the addendum (Attachment 10 in staff materials) so the adopted package reflects the $8.9 million projected deficit. The council scheduled a fall revise (targeted for late October/early November) and a midyear revision (late winter) to consider longer-term measures and any additional savings.

The council also directed staff to provide ongoing, transparent tracking of the remaining gap and proposed monthly updates showing how the $8.9 million shortfall is being reduced before the fall revise.

Ending: Council members said they expect continued engagement with bargaining units and department managers over the summer and early fall to produce sustainable savings and to return with additional proposals before the midyear review.