Costa Mesa unveils $224.4 million proposed 2025–26 budget, prioritizes public safety and slows some capital spending

City officials presented the City of Costa Mesa’s proposed fiscal year 2025–26 operating and capital budgets at a May 13 study session, outlining a $224.4 million all‑funds proposal and a $186.9 million general fund. Finance Director Carol Molina said the draft is “focused, efficient, and resilient” and is structurally balanced without drawing on reserves.

The budget proposal directs a majority of general fund resources to public safety: staff estimate that police and fire together would receive about 54 percent of general fund spending. Molina told the council the proposal funds 42 sworn police positions and 85 sworn fire positions, and recommends adding one custody officer in the police department while removing funding for several currently vacant administrative positions, for a net decrease of two general‑fund full‑time equivalents.

Why it matters: City leaders framed the proposal as cautious in the face of uncertain revenues — notably a projected decline in sales tax — while preserving core services. The proposal would slow or defer some capital investments in a year when staff say outside grant funds and other dedicated sources will pay for many projects, but it also retains a multi‑year plan for major projects including a proposed bond for Fire Station 2.

Top numbers and revenue assumptions

- All funds proposed budget: $224,400,000 (a $15.4 million or ~6% decrease from the current adopted year). Finance staff said much of the drop reflects lower forecasted sales tax receipts. - General fund proposed: $186,900,000 (a $3.0 million, 2% decrease versus the current adopted year). - Sales tax: staff estimate $75.1 million (an 8% decline from the current adopted budget). - Property tax: projected $63.0 million (about 4% growth). - Transient occupancy tax (TOT): $9.8 million (a small decline from the prior year). - Cannabis tax (general‑fund share reported by staff): $3.6 million.

Budget priorities and operating changes

Molina summarized department requests and recommended personnel changes. She told council, “We are fully committed to public safety by allocating 54% of our general fund towards police and fire.” The police budget includes $1.0 million for vehicles and contractual obligations; the fire budget includes $1.1 million in increases and funding for protective equipment and training.

To balance the budget staff recommended removing funding for several currently vacant, non‑public safety positions across departments and placing additional vacant positions on an unfunded “frozen” list. Molina said the proposal recommends eliminating one community outreach worker in the city manager’s office and removing funding for three general‑fund positions in the city manager’s office. Staff emphasized the positions proposed for deletion or freeze are vacant.

Capital spending and Fire Station 2 bond

The proposed capital improvement program (CIP) totals $28.7 million and includes street, facility and park projects; staff said many CIP projects rely on restricted funds such as RMRA (SB 1) gas tax, Measure M, Measure Q, grant funds, and other dedicated sources. Public Works Director Raja Sethraman summarized the CIP highlights: Adams Avenue trail work, Harbor Boulevard rehabilitation using RMRA, park security lighting upgrades, bicycle and pedestrian projects, the city’s micro‑transit shuttle program, and a major reconstruction of Fire Station 2. Sethraman said the Fire Station 2 project would be financed in part by a potential future bond of $12 million; staff said they expect to return to council later this calendar year with formal bond actions.

Staff told council they are planning to use $2.2 million of available balance in the CIP fund (Fund 401) to cover CIP needs in lieu of a general fund transfer this year and recommended invoking an emergency exception to the city’s 5% general‑fund capital contribution policy (called the CAN policy) for the current economic climate, a step that would require a supermajority vote if the council chooses to proceed.

Arts fund shortfall and commission recommendations

Staff reported the Arts & Culture Master Plan fund — financed in part by a half‑cent of Measure Q sales tax — faces a projected shortfall. Molina said the fund is about $175,000 short of the budgeted needs for 2025–26; the Arts Commission recommended reallocating existing unspent funds for grants and a mural program, which staff said would increase the shortfall to about $340,000. The commission’s vice chair urged a commission‑led master plan update and a dedicated public‑art fund during public comment.

Housing, homelessness and related investments

Staff described continued investments in homelessness services and affordable housing. Acting City Manager Cecilia and housing staff noted the city contributed $1.3 million from the general fund to the housing authority and that the Mesa Vista Apartments (a former Motel 6) have 40 leased permanent supportive units, with phase 2 planned to add 46 additional affordable senior units funded in part with low‑income housing tax credits. Staff also said the city received a one‑time state grant of $750,000 from Assemblywoman Cottie Petrie‑Norris to support behavioral health services at the bridal shelter; staff reported the city has housed 442 individuals since February and that the homelessness hotline received more than 2,000 calls.

Contracts and operating constraints

Finance staff walked the council through contracts that staff judge difficult to reduce, including park and landscape maintenance, ambulance transport, police mobile video systems, traffic signal maintenance, tree trimming, animal shelter services, and others. Molina said departments had already tightened operating budgets and that most areas were at minimal levels for service delivery.

Public comment highlights

Public commenters spoke mainly about local parks, tenant and renter protections, and language access. A Brentwood Park resident asked about funding for playground replacement; Angelie Andrade and others urged annual investment to plan and develop green space on Costa Mesa’s West Side. Christian Lopez of Resilience OC urged enhanced Spanish‑language interpretation and more advance agenda notices so Spanish‑speaking residents can meaningfully participate; Lopez said “Part of enhancing the communication and community engagement must include a commitment to interpretation services and providing Spanish language material.”

Jack Hammett Sports Complex negotiations

Council members asked about use of Jack Hammett Sports Complex for professional training camps. Parks staff said negotiations are led by the city manager’s office with participation from parks and community services, public works, police, fire and the city attorney. Staff said the city is preparing an item to recommend approval of hosting the UCLA Bruins for a training camp; staff also said the Los Angeles Chargers will not use the complex this year and that the city followed a same‑year, one‑time agreement process it used previously for other teams.

Next steps and timeline

Staff said the council’s next formal steps include a FIPAC/CIP review, a June 3 public hearing on the proposed operating budget, and potential follow‑up council meetings on June 10 or 17 if additional review is needed. Staff described the proposal as cautious and noted that staff will return with more detail on any emergency exception to the CAN policy and with further documentation at the June public hearing.

Ending

Council members thanked staff across departments for the presentation and for front‑line services. No formal votes were taken at the study session; the draft budget will return for formal hearings and adoption steps in June.