Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Budget Forecast topic
No spam. Unsubscribe anytime.
Santa Rosa projects $19.3 million general fund deficit for FY25-26 as sales tax falls and costs rise
Summary
City staff presented a preliminary FY25-26 forecast showing a $19.3 million budgeted deficit driven by a $5.5 million sales-tax reduction, rising salaries and benefits, and the end of ARPA support for homelessness services. Departments will return reduction proposals and the council will review study sessions in April and May.
Veronica, staff member, presented the Santa Rosa City preliminary fiscal year 2025–26 forecast to the finance subcommittee and said the proposed general fund deficit for FY25-26 is $19,300,000.
"In fiscal year 25, 26, we have a $19,300,000 deficit," Veronica said. She described the outlook as driven by two main factors: slow revenue growth and sharply rising expenditures.
On the revenue side, staff expect roughly $3,000,000 from recently passed tax measures, continued property tax growth of about 5% (approximately $3,600,000), and a planned reduction of the sales-tax budget by about $5,500,000 after consultant review. Planning and recreation fees show no net increase in the proposed budget because many projects were grandfathered under previous fee schedules and development activity has shifted toward smaller projects.
On the expenditure side, Veronica said salary and benefit increases account for approximately $9,300,000 of the single-year increase, driven by contract cost-of-living adjustments, an equity adjustment for miscellaneous employees and higher benefit costs. Council actions in January to reduce operating costs produced about $4,100,000 in savings for FY25-26, and a measure that shifted the Redcom contract now yields approximately $1,300,000 in lower contractual costs for the general fund; however, increases in fleet costs and fire/earthquake insurance have absorbed much of those savings.
Staff also called out transfers and uncontrollable liabilities that worsen the structural gap. Transfers out are increasing by about $1,500,000 in FY25-26 because ARPA funds that previously covered homeless services are expiring and the general fund will resume covering those costs. The city’s CalPERS unfunded actuarial liability (UAL) is projected to increase about $11,000,000 over five years according to the CalPERS valuation, contributing to a five-year projected gap that staff said could grow toward roughly $46,000,000 without sustained action.
Veronica and Scott Wagner, deputy director of finance, said staff are meeting with the city manager and departments to develop reduction lists. Staff will present proposed reductions in a Council study session on April 15, return for a detailed budget study session in May, and present third-quarter general fund results to the LTFPA on April 22 so the Council and subcommittee can assess year-end reserves.
Committee members asked about the roles of county funding and voter-approved measures in offsetting costs for homelessness. Several members noted that Measure O and Measure M revenue streams and stronger county partnerships could reduce the city’s near-term burden for homelessness services; staff said those discussions are underway but did not present binding commitments.
The subcommittee did not adopt budget reductions at the meeting. Staff said the process will be iterative and that department reduction proposals and Council direction in April and May will determine the final FY25-26 budget.
Ending: Staff will present department reduction proposals at an April 15 Council study session, return for a May in-depth session, and report third-quarter results to the subcommittee on April 22; the final budget will reflect Council choices informed by those sessions.
