Sonoma City Council adopts balanced FY 2025–26 budget with modest surplus, funds for parks and homelessness

The Sonoma City Council approved the city’s fiscal year 2025–26 operating and capital budget Monday evening, adopting a budget the city called balanced but cautious amid regional economic uncertainty.

Finance Director Propti Arjo presented the plan to the council, saying, “Tonight, I'm here to present you fiscal year 25 26 operating and capital improvement budget.” The package the council approved includes a general fund revenue estimate of about $28.8 million and proposed general fund expenditures of about $28.6 million, producing a modest surplus the staff estimated at roughly $200,000.

The nut of the proposal is conservative revenue projections and targeted one‑time spending. City Manager David Guillen told the council the document was designed to respond to uncertainty: “the budget that's before you today, has done a lot to try to address uncertainty,” and staff would return if conditions changed. The finance director said personnel costs rose about 10% and the city’s CalPERS unfunded liability (UAL) increased roughly 9%, both primary cost drivers.

Key budget details and priorities

- General fund: Proposed general fund revenue $28.8 million; proposed general fund expenditures $28.6 million, producing a narrow projected surplus for FY 2025–26. The city projects modest surpluses in out years but emphasized that those projections are sensitive to changes in public‑safety contract costs and other drivers.

- Major revenue drivers: Transient occupancy tax (TOT), property tax and sales tax remain the top three revenue sources. The finance director presented a projected TOT budget of about $5.98 million and projected property tax receipts of roughly $5.9 million (an increase of approximately 3.65% year over year). Staff warned sales tax and tourism revenues could remain flat or decline slightly given high interest rates and reduced consumer spending.

- Pension and personnel: The city flagged a $2.0 million CalPERS UAL cost for 2025–26 and noted increased personnel and operating costs tied to wage and benefit adjustments.

- Parks and facilities: The approved budget adds one full‑time Parks and Recreation director position. The council also allocated $318,000 to the Recreation and Community Services discretionary funding program (1.5% of qualifying general fund tax revenues), with program awards capped at $3,000 per applicant. Council members and members of the public pressed for a clearer multi‑year plan for the plaza; staff said irrigation and an electrical assessment are planned and that a city facilities assessment line item of $46,000 (Fund 610) is included to identify priorities across city properties.

- Homeless services: The budget includes $200,000 in ongoing funding for homeless services in Sonoma Valley and records one‑time requests totaling $75,000 from Unity Kitchen and Homeless Action Sonoma; staff said the one‑time requests will be funded from the city’s general fund reserve. Overall homeless program funding shown in the presentation totaled $275,000 for FY 2025–26 when one‑time asks are included.

- One‑time requests and deferred projects: Staff identified $565,000 in one‑time requests to be funded from reserves and noted a number of capital projects were delayed to midyear for further review. Street, parks, water and building CIP totals were presented by fund; the water CIP was shown at about $655,000 and parks CIP at about $645,000 for the year.

Public comment and council questions

Members of the public urged the council to sustain affordable housing work and questioned spending priorities. Donna Danbock, who said she had planned to speak later when Agenda Item 9.2 was on the calendar, urged the council to pursue the item and asked whether the city could accept tax‑deductible donations for the housing trust fund. Robert Dimler, a First Street West resident, urged more study of long‑running costs at the Depot Park Museum and asked that the museum be reviewed before additional spending.

City Manager David Guillen replied to questions about donations and said the city’s housing trust fund is configured to accept tax‑deductible donations: “Yes. That fund does allow donations to tax free donations to it. It's set up that way as the trust fund.” Public Works Director Mike Berger confirmed that a structural deficiency at the Depot Park Museum had been identified during recent HVAC work and that necessary repairs are on the city’s must‑fix list.

Council members repeatedly thanked staff for the work producing a balanced budget and pressed staff to return with midyear updates. Several council members emphasized the narrow margin of projected surplus and the need to monitor public‑safety contract costs, wildfire risk and other external drivers that could quickly shift the city back into a deficit position.

Next steps

Staff said the FY 2025–26 budget book will be published online in July 2025, the year‑end update for FY 2024–25 will be presented in December or January, and a midyear review with an updated five‑year forecast will be brought back in late January 2026.

Votes at a glance

The council approved six related resolutions by voice vote; all present members voted in favor and no opposition was recorded during the meeting.

- Resolution 1: Adopt FY 2025–26 City of Sonoma operating and capital budget and approve the community funding program — Approved. - Resolution 2: Authorize carryforward of capital project funds appropriated and unspent in FY 2024–25 into FY 2025–26 — Approved. - Resolution 3: Authorize the city manager to carry forward operational funds for one‑time projects appropriated and unspent in FY 2024–25 into FY 2025–26 — Approved. - Resolution 4: Authorize the city manager to fund the Recreation and Community Services discretionary funding program for FY 2025–26 — Approved. - Resolution 5: Approve a budget amendment authorizing use of general fund unreserved balance to support one‑time projects and authorize the city manager to execute or amend related contracts — Approved. - Resolution 6: Establish the FY 2025–26 appropriations limit — Approved.

Council members and staff said they will continue close monitoring and bring midyear adjustments if economic or contract conditions change.