Carlsbad council advances preliminary FY2025-26 budget, sets June 17 adoption hearing

City officials presented the preliminary fiscal year 2025–26 operating budget, capital improvement program and strategic digital investments to the Carlsbad City Council, which directed staff to set a June 17 public hearing and voted unanimously to advance the budget resolutions for final adoption.

The preliminary plan, introduced by City Manager Jeff Patno and presented in detail by Deputy City Manager Laura Rocha and Finance Director Zach Korach, proposes a modest 1.8% increase in the general fund over the prior year while increasing general fund reserves from about 55% to 61% (approximately $147,000,000). Korach said the city also plans to hold $10,000,000 for economic uncertainty, $19,000,000 in a Section 115 pension trust and $10,500,000 in an asset replacement reserve.

The budget package includes one‑time and ongoing investments tied to council priorities: $2,600,000 to purchase a second frontline aerial ladder truck for the Fire Department; $403,000 to reclassify six EMTs to paramedic firefighters; funding to support restored Sunday hours at libraries; and funding for six police positions approved earlier this year. The presentation also highlighted a $47,000,000 request in FY26 for capital construction and maintenance with an estimated $132,000,000 of construction costs over the coming years for projects currently in scoping or design.

Zach Korach outlined the city’s analysis of CalPERS prepayment versus monthly payment options for the pension unfunded liability. He said the full prepayment would deliver an estimated $600,000 in up‑front savings but would forgo about $300,000 in investment income the city could earn on those funds. Korach told the council the preliminary budget assumes monthly payments; staff said they will adjust the final budget if the council directs prepayment.

Rocha and Korach summarized other items included in the draft: approximately $440,000 in new Climate Action Plan–related costs (including work to pursue Clean Energy Alliance options), $3,000,000 appropriated for core systems modernization in the Strategic Digital Transformation Investment Program, and a recommended $2,000,000 transfer from the general fund to the stormwater enterprise to maintain a positive fund balance.

Councilmembers asked staff for clarifications on revenue assumptions, CalPERS risk, and capital project timing. Councilmember Teresa Acosta pressed staff on the likelihood of losing money if the city prepays CalPERS; Korach said prepayment is “on paper” more beneficial but warned of the market risk if CalPERS experiences negative investment performance soon after a lump‑sum payment. City Manager Jeff Patno said the presentation reflects four years of work to align the budget with the city’s five‑year strategic plan and maintain reserves.

Following the presentation and public comment, Mayor Pro Tem Priya Bhat Patel moved adoption of the associated resolutions and to set the June 17 public hearing; the motion passed unanimously.

The council also approved smaller procedural and budgetary items during the meeting: a one‑time $75,000 allocation for parks and trails maintenance (see separate report on Hub Park trails) and direction to return with additional options on certain CIP projects. Staff will return with the final budget for adoption on June 17, after the public workshop scheduled for May 22 and the public hearing.

Ending: Staff committed to provide additional detail on CalPERS scenarios, the final CIP list and any requested scope adjustments ahead of the June 17 hearing.