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Council discusses budget, directs ARPA funds to regional homelessness group and approves a fire academy request
Summary
At a fiscal update and study session May 20, Vacaville staff reported an improved revenue picture for FY25 but projected multi-year deficits. Council gave direction to use ARPA-designated funds to cover a one-time contribution for Capsolano staffing and supported a $300,000 plan for a February 2026 fire academy.
City staff presented a third-quarter general fund update and the second budget study session for fiscal year 2026 on May 20, reporting improved revenues for FY25 driven by one-time sales-tax transactions and stronger property-tax receipts. The presentation projected an FY25 positive variance versus the adopted budget but showed recurring structural deficits over a five-year forecast if cost-saving measures are not continued.
Key figures from staff: revised FY25 revenue projections were roughly $8.2 million higher than adopted estimates (about a 5.7% positive variance), driven by higher property taxes and a one-time sales-tax transaction. Staff cautioned that most industries in the sales-tax mix were flat to slightly negative when that one-time transaction is excluded. The city's general-fund reserve was projected to be about 29% in the short term under the staff scenario but would decline in subsequent years absent continued cost controls.
Council discussed a package of one-time and temporary cost-saving measures proposed in the prior study session. Measures included a citywide 2.5% department reduction, pauses or reductions in several pilot and non-essential programs, deferring certain capital projects, and reductions in planned internal-service contributions. Staff recommended some items be funded with one-time ARPA proceeds that the city previously set aside for homelessness-related uses.
After discussion council signaled support for two limited uses of ARPA-designated funds: a one-time (approximately $124,000) contribution to Capsolano (a regional homelessness and coordination entity) to support staffing and program continuity; and use of the QualityM ARPA allocation to cover that contribution. Council further supported a $300,000 appropriation for a Fire Academy planned for February 2026 to address anticipated retirements and staffing needs in the fire department. Staff said the one-time ARPA funding would be used for FY26 only and that future fiscal-year payments would be included in the general fund forecast if necessary.
Council also heard about employee-vacancy rates and recruitment activity (AB 2561 compliance), community development and DIF/CFD outreach, and a draft CDBG Consolidated Plan and Section 108 loan application; those items are summarized in separate briefings.
Next steps: staff will include the clarified direction on ARPA use and the fire academy request in the draft FY26 budget packet for the June study sessions and anticipated budget adoption on June 24.
