Hemet staff presents budget adjustments and three fiscal forecasts as pension, insurance costs rise

Tiffany Barnett, Hemet administrative services director, told the council at a work study session Tuesday that staff has cut or reallocated spending and identified new revenues to reduce a previously projected $14.6 million general‑fund gap for fiscal year 2025–26.

Barnett said staff found about $925,000 in additional recurring revenue adjustments — including higher estimates for motor vehicle and property tax growth recommended by the city’s consultant HDL, modest cannabis receipts, transient occupancy tax (TOT) audit recoveries and incremental sales tax — and has identified $3.5 million in expenditure reductions and one‑time uses of fund balance that together reduce the gap to about $3.4 million.

The presentation explained why the city faces sustained pressure: large increases in pension costs and insurance/liability premiums are major drivers. Barnett said CalPERS employer costs have risen sharply over the last decade, and the city’s projected pension cost for next year would increase from roughly $6.7 million (2015) to about $17.4 million. She also described an expected increase in liability and excess‑claims costs and a planned 3%…