Hermosa Beach reviews balanced FY2026 budget and flags rising costs from county contracts and inflation

Hermosa Beach City Council on June 10 reviewed a proposed, balanced fiscal year 2026 budget that preserves a 20% general‑fund reserve, advances about $34 million in capital projects and asks council to reactivate a finance subcommittee to study revenue and cost options.

Interim City Manager Steve opened the budget workshop by calling the document “a living document” and saying, “The proposed budget for your consideration is balanced.” Administrative Services Director Brandon Walker gave a detailed presentation of revenue and expenditure assumptions and supplemental requests.

Why it matters: Council and staff said the city faces a near‑term budget squeeze despite a balanced FY26 plan. Staff forecast that costs could outpace revenues in FY2027–28 because several county contracts that Hermosa Beach shares or relies on — including lifeguard, beach maintenance and fire services — are up for renegotiation and could increase substantially. Officials also cited construction inflation, a new wave of tariffs and pension funding uncertainty as risks to the city’s five‑year outlook.

Key fiscal picture: Brandon Walker told the council property tax remains the city’s largest revenue source, at roughly 40% of general‑fund dollars; service charges make up about 18%; transient occupancy tax about 9%; and vehicle‑in‑lieu payments about 7%. Sales tax was described as a small portion of Hermosa Beach’s general fund compared with many nearby cities.

On expenditures, Walker said more than half of every general‑fund dollar supports public safety and personnel costs, with public works, parks and recreation,…