Sonoma City hears federal budget risks: municipal bonds, CDBG, FEMA and EMS reimbursement flagged as priorities

SONOMA CITY — At a special April 21 meeting, the Sonoma City Council heard a briefing from MMO Partners lobbyists on pending federal budget and appropriations work that the firm and the county—s cities are tracking, and council members and the city—s fire chief raised immediate local concerns including public safety funding, municipal bond tax treatment and potential cuts to grants that support recovery and housing programs.

MMO Partners senior representative John O'Donnell told the council the current congressional process is likely to be "a roller coaster" as lawmakers work on a reconciliation package and FY 2026 appropriations. "Right now we're in the business of finishing up FY25 appropriations. It's a CR," O'Donnell said, referencing the continuing resolution that left FY25 funding levels at FY24 amounts in some programs.

The presentation and ensuing discussion focused on several federal programs and risks the lobbyists and council said could affect Sonoma City services and budgets, including:

- Municipal bonds: Lobbyists warned proposals to eliminate or limit the tax‑exempt status of municipal bonds remain under discussion in Congress and on the House and Senate tax committees. O'Donnell said the firm has been using a University of Chicago study showing how tax‑exempt bonds are used across congressional districts to make the case to members of Congress about the bonds' importance to local governments. Council members asked about downstream effects on public pension funds and the city budget.

- Community Development Block Grant (CDBG) and HOME: The lobbyist team said that CDBG and HOME funding are on the watch list for proposed cuts. Kyriakos, the presenting MMO Partners lobbyist, noted that because FY25 was passed via a full‑year CR, CDBG was temporarily funded at FY24 levels and cited figures used by the firm: "CDBG was fully funded at least at those levels of '24 at $3,300,000,000. The HOME program reverted to $1,250,000,000 under the CR." The firm said cuts could reappear in FY26 proposals.

- FEMA and BRIC: Kyriakos and O'Donnell said the administration has signaled changes to some grant programs and that the FEMA BRIC (Building Resilient Infrastructure and Communities) program is at risk of elimination or repackaging. The lobbyists added the Department of Transportation is also reviewing and "scrubbing" discretionary grants that have not gone to final agreement.

- Medicaid/Medicare and EMS reimbursement: O'Donnell and Kyriakos flagged proposed Medicaid and Medicare changes in reconciliation discussions as having possible large effects on state and local budgets. Chief Acre of the Sonoma fire department told the council that EMS reimbursement issues are a central local concern: "We are actively engaged on these, including Medicare, Medicaid, and what impacts and how to potentially limit those, if they are really on the chopping block." He warned that reductions would affect ambulance services and local emergency response capacity.

- Transportation reauthorization and IIJA programs: MMO Partners said the IIJA surface transportation package must be reauthorized by 2026 and discretionary programs such as Safe Streets for All continue to be priorities; Kyriakos noted a $1,000,000,000 authorization for Safe Streets for All in recent appropriations language and urged local agencies to prepare stakeholder input requested by the House T&I Committee.

- Other agency and program risks: The presenters listed other areas under scrutiny, including proposed administration cuts to LIHEAP (Low Income Home Energy Assistance Program) and Head Start, potential tariff effects on tourism and agriculture, and continuing debate over new revenue proposals tied to electric vehicles.

Council members and local officials pressed the lobbyists on which items the city should prioritize. Councilmember Lowe said pensions and public safety funding are her top concerns, noting potential indirect effects on the city—s ability to provide police and fire services. Vice Mayor Wallander asked the city—s staff and lobbyists to track potential tourism and sales tax impacts, given Sonoma's reliance on TOT and sales tax. Councilmember Gurney asked staff to quantify how much city revenue is tied to federal sources so the council can model potential cuts in the local budget.

Fire Chief Acre described operational risks if federal support falls: he told the council that FEMA—s role in recovery is crucial and cautioned that the U.S. Forest Service has struggled to staff up to 40% of its fire stations in recent years, which shifts additional burden to local responders.

City Manager (name not specified in the transcript) asked the council to identify priorities for MMO Partners and agreed to share any correspondence sent to federal representatives with the full council. The city manager said the firm meets monthly with the county—s cities and will circulate updates; he also said staff could work with the mayor to provide rapid responses to congressional outreach when needed.

Votes at a glance

The council approved the regular meeting agenda that followed the special session. The motion to approve the agenda was moved and seconded and carried by voice vote with all members present voting in favor (Councilmember Lowe; Councilmember Gurney; Vice Mayor Wallander; Councilmember Ding; Mayor Farrar Rivas). The vote was recorded as approved with no abstentions or no votes.

What happens next

MMO Partners said it will continue monthly briefings for Sonoma County cities and will report back to Sonoma City staff when the FY26 presidential budget and subsequent congressional actions are released. City staff said they will compile local impact data (for example, municipal bond exposure and federal grant dependencies) to share with the delegation and to support any "dear colleague" letters or other advocacy requested by the council.

Council members voiced repeated priorities for advocacy: protecting municipal bond tax‑exempt status, preserving FEMA and BRIC funding for resilience and recovery, maintaining CDBG/HOME and other housing programs, ensuring EMS and ambulance reimbursement through Medicaid/Medicare, and monitoring tourism and economic effects of tariffs and immigration policy.

The special session concluded with the city taking a short recess before the regular meeting.