Seaside officials review $48.3 million draft budget; unassigned fund balance projected $1.7 million shortfall

Seaside City Council on Tuesday, June 10, received a detailed presentation of the city's draft fiscal year 2025—26 operating and capital budget and discussed options to address a projected unassigned fund balance shortfall of about $1.7 million. The council did not take final action; staff will return with refined options at the next study session on June 12 and will present a revised compliant budget for consideration on June 24.

The draft general fund operating plan projects $48.3 million in revenues and $48.2 million in operating expenditures, producing an operating surplus of roughly $60,000. When nonoperating uses are included the proposal relies on $2.6 million of unassigned fund balance to support $625,000 in general-fund capital spending and $2.0 million set aside for street maintenance. Finance staff said that use of reserves would leave the city about $1.7 million short of the 30% reserve target in the city's municipal code.

City Manager (name not provided) framed the budget as a fiscal-reset conversation: "The annual budget is one of the most important tools in municipal governance," he told the council, noting slower revenue growth, elevated inflation, and rising personnel and pension costs. Finance Director Jessica Riley outlined the numbers and the trade-offs staff used to bring the package close to balance: $48.3 million in general-fund revenue, $2.7 million in proposed capital allocations across funds, and about $4.6 million in reductions to department requests achieved during the development process.

Staff identified several economic pressures shaping the draft: flat or weakened sales-tax performance (notably lower automobile sales), continued pension liability pressure, and personnel costs that account for roughly 75% of general-fund expenditures. The long-range forecast includes a large Caltrans ATP transportation grant of $9.3 million for the Broadway Avenue corridor (all-funds), a $175,000 RSTP street grant, and a $1.8 million multi-year Prop 47 behavioral health/community services grant that substantially increases non-general-fund program activity.

To reach the near-balance in the draft, staff froze 20 vacant positions across departments (a staffing level roughly 11% below optimal, per staff) and trimmed $4.6 million from initial department requests. The draft also proposes a policy change to return a prior-year midyear allocation to streets from 50% of a projected surplus back to 25%, where staff said it had been before an earlier temporary increase.

Council members pressed staff on specific items: the composition and timing of frozen positions, the methodology for recent allocations such as workers' compensation changes, and the City's ability to preserve street work. Assistant City Manager Dan Mews and other department leads walked through department-level changes; several council members said a combination of strategies (deferring some capital, reducing discretionary operating expenditures, evaluating pension-trust options and limited workforce changes) would likely be needed to close the reserve gap. Staff said they will return on June 12 with more detailed estimates of savings tied to each strategy.

The Neighborhood Improvement Commission (NIC) presented a separate set of recommendations for Tourism-Occupancy-Tax-funded neighborhood projects totaling about $310,000 (including bench replacements, utility-box wraps, additional murals, a pilot solar-powered picnic-table charging station, wheelchair-accessible bench pads, and two small locker towers for personal items). Councilmembers asked staff to vet installation/maintenance costs and locations before committing funds; Council deferred final action on those NIC recommendations to a later meeting.

What happens next: staff will present additional options and department-level updates at the June 12 study session and intends to return a revised, reserve-compliant budget for council consideration and possible adoption at a special meeting on June 24. The city is operating under an appropriations limit staff reported as $44.4 million; staff said the city is currently under that limit by roughly $3.1 million.

Discussion points, directions and status

- Discussion: Staff emphasized slower near-term revenue growth and rising pension and personnel costs as the primary pressures on the budget. Department heads detailed program-level changes and one-time grant activity. - Direction to staff: return June 12 with detailed savings estimates tied to five strategies (evaluate discretionary operating expenditures; defer general-fund capital projects; reduce general-fund transfers to streets; consider limited use of Section 115 pension trust resources; and consider workforce options). Staff also to present a recommended compliant budget for June 24 consideration. - Decisions: No formal budget adoption on June 10; council scheduled further study and review. NIC TOT recommendations were presented but not adopted.

Ending note: Council members repeatedly emphasized protecting core public-safety services and seeking a combination of targeted cuts, capital deferrals and other measures to restore the unassigned fund balance to policy targets. Staff said the revised budget and a more detailed five-strategy analysis will be ready at the June 12 study session and again on June 24 for formal consideration.