Belmont presents FY2025–26 budget proposal; $1.4M general fund gap tied to vehicle license fee uncertainty

Finance staff on Tuesday presented the City of Belmont’s proposed fiscal year 2025–26 operating and capital budgets and a 5‑year forecast that highlights an emerging gap tied to a state vehicle license fee (VLF) reimbursement issue.

Grace Castaneda, the city’s finance director, said the proposed city and Belmont Fire Protection District operating budgets total about $80.8 million with a combined proposed capital improvement (CIP) budget of $13.5 million for FY2025–26. Castaneda told the council that general fund revenues are projected at about $32.9 million while expenditures are proposed at about $34.3 million, "giving us a gap of $1,400,000, which means that this is requiring a draw on general fund reserves to fill that gap and balance the budget," she said.

Staff emphasized that the gap is tied to the state’s decision not to include a promised VLF reimbursement in its January and May revised budgets. Castaneda explained that for Belmont the unbudgeted VLF shortfall is about $1.7 million; if the state pays that amount into the legislative budget by the June budget deadline, Belmont would not need the reserves. She said the city is actively engaging state leaders to seek restoration of the funding but cautioned that removal of VLF backfill could reduce city revenues materially over the coming decade.

The staff presentation detailed where revenues come from (property tax, transient occupancy tax, sales tax and business license generate the majority) and that personnel costs are roughly 60% of general fund expenditures. The 5‑year forecast models showed that, absent VLF reimbursement, revenue growth would slow to about 2% annually and general fund balances could decline toward the city’s reserve target by FY2030–31.

Department directors presented highlights and priorities. Public Works Director Nisha Patel described sewer and storm projects, pavement and lift‑station work, and several grant pursuits; Community Development Director Tumelo (first name not provided in the presentation) reviewed ongoing housing and planning projects and zoning work; Parks & Recreation Director Bridget Shearer summarized facility work including an upcoming library reopening and Twin Pines Park projects; and Police Chief Ken Stenquist discussed public‑safety priorities and community outreach. Staff noted a forthcoming citywide fee study and planned ERP (enterprise resource planning) evaluation to improve financial systems.

Councilmembers thanked staff for the clarity of the materials, asked questions about reserves and the history of reserve draws, and reiterated a need for outreach on major capital projects. Mayor Mates urged continued advocacy to state legislators on the VLF issue and stressed that the VLF shortfall represents existing local revenue rather than a new grant.

Ending: Staff will return with a final budget for adoption at the council’s June public hearing; the planning commission will review the CIP for general plan consistency on the schedule described in the presentation.