Mount Shasta finance staff propose cuts, staffing changes to narrow FY25‑26 shortfall

City finance staff outlined proposed adjustments to the adopted FY2025‑26 budget at the May 12 Mount Shasta City Council meeting that are intended to narrow a projected fiscal shortfall and preserve general‑fund reserves.

Melissa (city staff) told council the adopted two‑year budget had originally shown a $526,000 surplus in the document; subsequent updated projections had indicated a roughly $450,000 deficit prior to the recent departmental adjustments. After meetings with department leadership and the audit/finance ad hoc committee, staff said they reduced the projection to roughly a $400,000 deficit under the proposed changes.

Key proposals described by staff included two recommended staff reductions (one position proposed in the police department and one in the fire department), filling one of four public‑works vacancies but reassigning duties to shift some street work into sewer work to net an estimated $70,000 in general‑fund savings, and applying about $50,000 of gas‑tax funds toward street maintenance tasks that were previously covered by the general fund. Staff also recommended modest reductions in contracts and supplies across police and fire departments.

Melissa said staff will return with a formal budget adjustment once the fiscal year begins because the council adopted the two‑year budget already; any adjustment would be processed after July 1. The council and audit/finance ad hoc committee discussed revenue uncertainty, including sales tax and transient‑occupancy tax (TOT) volatility. Melissa said the city had mailed TOT notices to hoteliers and short‑term rental operators; as of May 12 five operators had not yet paid TOT for January–March reports. Staff recommended moving to monthly TOT collection beginning in July to provide timelier revenue data.

Council members thanked staff for the work to narrow the gap. An audit/finance committee member said the proposed adjustments left the city “in a much better position” than before and described the work as thorough, while also noting limited remaining options if revenue deteriorates further.

Ending note: Staff said they will present a formal budget adjustment after July 1 and that the council may consider additional mid‑year changes if actual TOT or sales‑tax revenues decline materially during the summer.