Hayward officials outline $12.6 million structural deficit, plan fall "revise" and program reviews

Hayward City officials told the City Council at a May 13 budget work session that the proposed fiscal year 2025–26 operating budget shows a $12,600,000 shortfall and that staff will pursue program reviews and a scheduled fall revise to reduce the gap.

City Manager Dr. Alvarez opened the meeting by stressing the session was for discussion only. “This is a discussion-based work session. No decisions will be made at this evening,” he said, noting the presentation was intended to gather council feedback before the budget adoption process.

Interim Finance Director Sharifa Atman presented the fiscal outlook and several key figures: a $232,000,000 general fund expense plan, projected general fund revenue of about $219,700,000 and $31,600,000 in spendable general fund reserves. Atman said reserves fall short of the City’s general fund reserve policy target of 20% (about $46,000,000 for next year) and that one-time fixes such as ARPA funding and prior cash transfers have run their course. “When the number started to settle, it settled at $12,600,000,” Atman said.

Why it matters: staff said the gap is structural rather than a one-time timing issue and therefore requires multi-year, programmatic changes, not just using reserves. Atman told council that relying on reserves to close the full gap would be “imprudent and unwise,” and said the city has already used tools such as vacancy savings, a department-level reduction effort and deferrals of certain projects.

Revenue and expense drivers - Property tax remains the largest revenue source (about $80,000,000 projected) but growth has slowed, Atman said. She cited higher interest rates and a slowdown in housing turnover as reasons for reduced growth. - Sales-tax projections were affected by an unusual recent bump…