National City budget briefing warns rising pension and insurance costs will widen gaps; staff propose new CIP fund and revenue ideas

National City officials presented a preliminary budget briefing at a special City Council meeting, saying the city faces a multiyear budget gap driven by rising unfunded pension liabilities and insurance costs and outlining options to narrow the shortfall.

Finance Director Bruce Fultz and City Manager Scott framed the conversation as an early-stage briefing rather than a final operating budget. Fultz said the city manages roughly $151 million in total expenditures and $142 million in total revenues across all funds and that General Fund revenues are concentrated in property and sales taxes, which together account for about 79% of General Fund receipts. He told the council the city is projecting a roughly $3.3 million deficit for the current fiscal year and a preliminary $8.2 million deficit for fiscal year 2026 if no changes are made.

The figures matter because the city’s long-term liabilities are rising. Fultz said the General Fund’s required contribution to the CalPERS unfunded actuarial liability (UAL) is projected to be about $3.0 million next year (FY2026) and that pension obligation bond (POB) debt service and transfers will make the city’s non‑departmental budget substantially larger. He said the proposed reclassification of UAL and POB payments into a single non‑departmental line results in a non‑departmental total of about $13.4 million next year, including a $4.8 million POB payment and a $2.2 million General Fund portion of the UAL payment.

Fultz summarized revenue and expenditure drivers: property tax collections are seasonally timing‑sensitive (about 50% collected to date with the major installment due in May) and sales tax receipts lag by two months; development fees are trending below budget; and reimbursable fire overtime this year…