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Council receives FY 2025–26 preliminary budget showing a small projected deficit and reserve overview
Summary
Deputy Finance Director Jennifer Stachinski presented the preliminary FY 2025–26 budget. Staff showed an estimated general‑fund shortfall of about $45,000 before department reductions, projected reserves and capital funding plans; council set June 24 for the public hearing on the final budget.
Deputy Finance Director Jennifer Stachinski presented the city’s preliminary fiscal-year 2025–26 budget on May 20, 2025, telling the council the packet is a conservative, department-level forecast that includes known labor costs and existing MOUs and that staff will seek further reductions before the final budget.
Stachinski said the current preliminary model shows a modest general‑fund deficit of roughly $45,000, which staff plan to reduce to near zero by asking departments to identify additional reductions (she said managers were asked to find "between $50,000 to $67,000" per department). She also described the city’s reserve position: estimated total reserves of about $8.1 million at year end and undesignated reserves of roughly $2.2 million (about 11.4% of operating expenses).
The presentation detailed major funds and assumptions: Measure E (local sales-tax-funded capital and public-safety staffing), Measure B (wildfire program — first full fiscal year, funding risk-reduction positions and fuels projects), enterprise funds (water and sewer rates and capital needs), gas‑tax revenues and development impact fees. Stachinski noted water-system capital needs and said the water fund’s operating margin before capital was slightly negative and may require rate examination.
Stachinski said some costs are rising, notably workers’ compensation and property/liability insurance (10–15% increases expected) and CalPERS pension-related charges remain a long‑term pressure. She described a multi-year forecast and the city’s options if pension liabilities continue to rise, including use of pension stabilization reserves or other measures.
Nut graf: Council accepted the preliminary budget and provided staff directions to continue refining numbers. The council voted to set a public hearing for the final FY 2025–26 budget on June 24, 2025.
Ending: Council members asked for additional detail on CalPERS assumptions, sales‑tax trends and specific capital items; staff said actuarial updates for PERS are expected in July/August and that revenue forecasts are conservatively modeled and reviewed quarterly. The council voted to adopt the preliminary budget and set the June 24 public hearing for the final budget.
