Twentynine Palms finance director previews preliminary two‑year general fund budget; warns pension and sheriff costs could squeeze reserves

Twentynine Palms City Finance Director Abigail presented the city’s preliminary two‑year general fund budget to the City Council on May 20, laying out projected revenues, program subsidies and potential cost pressures that could turn the draft surplus into a shortfall.

The preliminary draft projects a surplus of about $213,000 in fiscal year 2025–26 and roughly $77,000 in 2026–27, Abigail said, and she emphasized the presentation was for review only; no approvals were requested at the meeting.

The nut of the presentation: property tax and vehicle license fee revenue remain the budget’s largest sources (Abigail listed a combined figure she described as about $4.7 million for vehicle license fees, $3.4 million for property tax, $1.9 million for transient occupancy tax and $1.6 million for sales tax). Program revenues for animal control and community services are heavily subsidized, she said, with about 88 percent of those program costs covered by the general fund.

Abigail told the council the draft does not include certain council priorities that remain undefined and that one discretionary staffing item under discussion — a sheriff’s service specialist position — would materially change the numbers. "If we were to include that position, it would reduce the surplus in fiscal year 25–26 from $213,000 to about $105,000," she said, and would produce a projected deficit in the second year unless other changes are made.

She also warned the sheriff’s contract is in active labor negotiations countywide and that the city should expect increases tied to those negotiations during the budget period. Other built‑in assumptions in the draft include a 2.5 percent cost‑of‑living adjustment for employees in 2025–26 and 3 percent in 2026–27, a 2.5 percent increase in user fees, a staff assumption of a 4 percent sheriff contract increase in the second half of 2025–26 and 5 percent in the following year, and rising insurance costs the finance department estimated at roughly 20–22 percent year over year.

Abigail addressed the city’s pension picture: as of June 2023 the pension plan’s funded ratio was about 88.4 percent, which she described as above average, but she said the city’s unfunded actuarial accrued liability is projected to increase (Abigail cited an expected 11 percent increase, about $74,000, in the next fiscal year). She recommended prefunding contributions ($50,000 in each fiscal year in the draft) to smooth future pension cash‑flow impacts.

Council members asked clarifying questions. Councilwoman Ramirez said she supported the $25,000 allocation for a grant writer in the draft and urged the council to restore homeless‑services funding she said had been reduced; she noted the city had already spent nearly $50,000 in the current fiscal year on related needs. Council member Scott praised the grant‑writing allocation as an investment for infrastructure work. Finance staff confirmed the budget includes a planned TOT audit (estimated cost about $14,000) and a variety of community event and nonprofit contribution line items.

Abigail closed by noting the city has budgeted reserves consistent with policy but cautioned that adding fixed costs such as new facilities or full‑time positions will reduce reserve longevity. She said the special revenue funds budget will be presented May 27 and that a public meeting for special revenue fund approval is scheduled for June 10.

The council took no action on the preliminary budget at the meeting; the item was presented for information and review and will return for formal consideration in upcoming public hearings.