Encinitas staff presents balanced preliminary FY2025–26 budget; council focuses on infrastructure, storm drains and rail crossings

City staff presented a preliminary, balanced operating and capital budget for fiscal year 2025–26 at a special City Council workshop in Encinitas, detailing projected revenue of $113,200,000 and projected expenditures of $105,000,000 and leaving an estimated unassigned general fund balance of roughly $6,500,000.

The presentation, led by Tom Gallup, director of finance and city treasurer, included an overview of reserves and planned transfers and noted pending and potential outside funding. “As staff prepared the proposed preliminary budget, we ensured that revenues exceeded expenditures. Thus, we have a balanced budget to propose,” Gallup said. He told the council staff is projecting a year‑end unassigned fund balance of about $6.5 million and that the general fund contingency reserve remains at the city’s 20% policy target.

Why it matters: the budget outlines how Encinitas will fund basic services and capital projects next year, and council members used the workshop to prioritize projects that city staff said could reduce future repair costs or unlock state and federal grants. Staff also flagged several uncertain items — notably a pending FEMA reimbursement and a PERS payment decision — that would change available funds if finalized.

Most important numbers and constraints - Projected revenue: $113,200,000. - Projected expenditures: $105,000,000 (a 3.6% increase from the current year, per staff). - Unassigned general fund balance staff cited: about $6,500,000. - Staff also noted a midyear unassigned balance of $6,900,000 and a potential net increase to fund balance of roughly $2,100,000 in the proposed budget, leaving about $8,500,000 available for appropriation before additional decisions. - Personnel: the budget does not propose additional FTEs; the budgeted FTE count remains at 249.4. Personnel costs were the largest single expenditure category (about 54% of expenditures).

Major open items and contingent funding - FEMA: staff reported a pending FEMA reimbursement of $2,600,000 that is in final review. Gallup said the amount is not yet available for budgeting until FEMA completes its review. - Pension (CalPERS) payment: a proposed $500,000 midyear payment to CalPERS is not included in the current unassigned balance; staff are preparing a pension analysis and possible policy to set a target funding amount in place of a fixed payment. - Grants and matches: staff included a $400,000 placeholder to match an HSIP (Highway Safety Improvement Program) grant. Staff also referenced an approved grant match for a Sanday grant application (listed in the presentation as $350,000) and various other grant opportunities that could change priorities if awarded.

Operations requests highlighted by staff City Manager Jennifer Campbell outlined two operations‑and‑maintenance requests included in the preliminary budget and one that would require new funding if the council chooses to add it: - Swap of positions: staff proposed eliminating one homeless solutions coordinator and creating a deputy fire marshal. Campbell said the swap would leave total FTEs unchanged and could slightly reduce cost. - Fire chief vehicle: staff included a planned vehicle purchase for the fire chief; Campbell said the request is currently accounted for in O&M and would not increase FTEs. - Additional law enforcement: staff presented two options for adding a traffic enforcement deputy — a marked vehicle deputy (first‑year cost including startup about $458,000) or a motorcycle deputy (first‑year cost about $408,000). Ongoing annual costs were estimated at roughly $347,000 (motorcycle) and $344,000 (car) after startup. City staff said the traffic deputy is not included in the preliminary budget and would require council approval to add.

Debt, reserves and bond rating concerns Staff described the city’s debt service schedule (projected debt service transfers of $5,500,000) and noted that bond‑rating considerations historically factor into the city’s borrowing capacity. A staff consultant previously estimated a borrowing cushion of about $13,100,000 to preserve the city’s A+ bond rating; council members discussed how much borrowing capacity the city currently has and whether limited borrowing could be used to acquire land for future fire stations.

Capital projects and the “donut chart” Director of Engineering Jill Bankston walked the council through the engineering “donut chart,” a status matrix of capital projects split into study, design and construction phases. Bankston said the chart moves unfinished projects forward from last year and tracks whether phases are funded, partially funded or unfunded. Staff noted the list is ordered by project status (where projects sit in the pipeline), not by priority, and said they will update the list for final budget adoption in June.

Projects discussed during the workshop included (costs are staff estimates presented at the meeting): temporary Fire Station 1 (design estimate forthcoming; staff said construction funding request expected in early May), Swami’s beach stair access (programmed at about $550,000 but not yet appropriated), Vulcan pedestrian path (staff described a range of design and construction options; an ADA‑compliant full design estimate was shown and staff estimated design funding around $175,000 to move the project forward), La Costa Avenue pedestrian path (staff cited an estimated $1,200,000 for a multiuse path), Leucadia at‑grade rail crossings and quiet zones (discussed as large, multi‑year undertakings often requiring CPUC review and significant grant funding), and extensive storm drain relining/repairs (staff and council discussed a multi‑year program with multi‑million‑dollar needs).

Public comments and community priorities Six members of the public spoke. Several urged the council to set aside money or be “shovel ready” for projects that could use pending grant awards: - Diana Nunez urged council to designate funds for at‑grade rail crossings in Northwest Leucadia and said the city’s CPUC application is already under review. She said earlier site analysis and design work began in 2021 and recommended funding be available to move quickly if approvals arrive. - June Hansberger and other commenters pressed for safer mobility projects in Northwest Leucadia, including the Vulcan Pedestrian Trail and the Hygiea (Lucadia) roundabout, which supporters said has been pursued for decades. - Bernadette Dillon described traffic and circulation problems at Santa Fe Drive and asked the council to reconsider recent changes there, keeping bike lanes but removing backup parking installations that she said are causing gridlock. - Scott Campbell and other commenters urged attention to public works funding and to prioritize projects such as storm drain repairs, streetscape segments and maintenance for older infrastructure.

Council discussion and next steps Council members and staff debated tradeoffs among projects and discussed possible allocations from the available balance. Staff said they are preparing a second budget workshop on April 23, followed by formal introduction of the proposed FY2025–26 operating and capital budget, with final adoption scheduled for June 11. The city manager and engineering staff asked council for direction on which projects to prioritize for design funding and grant matches so staff can bring a final spending plan to the June adoption.

What the meeting did not decide No formal votes or budget adoptions occurred at this workshop. Council had not yet decided on the midyear CalPERS payment, whether to add a traffic deputy to the FY2025–26 budget, or final appropriations for several capital projects; staff emphasized those items remain for future council action.

Looking ahead Staff will update the donut chart and bring a recommended final budget to the council for adoption on June 11. Staff also flagged pending external reviews — FEMA’s final review of the reimbursement request and CPUC review of at‑grade crossing applications — that could change available funding or project timing if outcomes arrive before final budget adoption.