California City council directs use of one‑time reserves to balance FY 2025‑26 budget; rejects $300,000 airport AC in proposed budget

City staff presented a proposed fiscal year 2025–26 general fund budget on June 10 and the City Council gave staff direction to use one‑time reserves to balance the budget while approving several staffing priorities and removing a high‑cost airport repair from the proposed spending plan.

City Manager Kenny Lopez told the council that the proposed general fund revenue was about $9.9 million while expenditures were about $11.1 million, leaving a projected gap of roughly $1.2 million. Based on audited statements through FY 2023–24, Lopez said the city’s unassigned general fund balance was about $13.1 million and staff proposed using one‑time fund balance to cover the shortfall for FY 2025–26.

Council direction and votes

After discussion and public comment the council directed staff to use fund balance to balance the FY 2025–26 budget. The manager reported the direction passed by a 3–2 tally. The council also directed staff to include funding for a finance director position and a cannabis program manager in the FY 2025–26 proposal and to move forward with pool staffing and lifeguard training; those items had majority support during the meeting. By contrast, the council unanimously declined to include a $300,000 air‑conditioning replacement for the airport clubhouse in the FY 2025–26 budget.

The council also decided not to include costs for a special election related to a parcel or public‑safety measure in the FY 2025–26 budget. Estimated election costs, discussed in the meeting, ranged from $50,000 to $70,000 and an associated public education effort from $15,000 to $25,000; the council asked staff to return with a plan if a future ballot measure is directed.

Why this matters

City Manager Lopez flagged that using reserves is not a long‑term solution and that, without new recurring revenue or significant expenditure reductions, the city will continue to face solvency pressures. The FY 2025–26 budget includes mandatory personnel cost increases and does not incorporate any new collective bargaining outcomes that may arise when current labor agreements expire on June 30, 2025.

Key figures and clarifications

- Proposed general fund revenues (FY 2025–26): approximately $9.9 million. - Proposed general fund expenditures (FY 2025–26): approximately $11.1 million. - Proposed gap to balance: approximately $1.2 million (proposed to be covered with one‑time fund balance). - Unassigned general fund balance (per FY 2023–24 audit): roughly $13.1 million. - Estimated special election cost: $50,000–$70,000; public education for a ballot measure: $15,000–$25,000. - Airport HVAC estimate discussed by staff: $300,000 (removed from FY 2025–26 budget by council direction).

Public comment and concerns

Members of the public and several council members pressed for alternatives to ongoing reserve use, questioned past budget and investment choices, and emphasized the need for clearer financial reporting. Speakers urged hiring professionally qualified financial staff and for transparency on investments and funds such as the SDI fund.

Next steps

Staff will return with a balanced budget proposal reflecting council direction, including the funded positions and the removal of the airport HVAC item. Council majority asked staff to obtain firm insurance quotes before budgeting insurance expenditures. Staff also will report back if the council later directs placing a ballot measure before voters.

Ending

The council’s directives preserved personnel levels while using one‑time reserves to avoid immediate layoffs. City officials and residents warned that continued reliance on fund balance is not a durable solution and that further action will be required to restore long‑term budget stability.