Temecula council adopts $107M operating budget, accelerates pension paydown and a $894M CIP plan

The Temecula City Council on May 27 adopted the city's fiscal year 2025—26 operating budgets and a five-year capital improvement program, approving an additional $10 million payment toward the city's pension liability and funding priorities that include public safety and infrastructure.

City staff said general fund revenue is projected at about $114 million and general fund expenditures at $107 million next fiscal year, with 56% of the budget dedicated to public safety. Measure S revenue is expected to total about $40 million for FY2025—26. The Temecula Community Services District (TCSD) budget was presented separately; TCSD operating revenue is projected at about $21.3 million.

The council's five-year capital improvement program (CIP) presented totals roughly $894 million in project costs; staff reported $624 million in secured funding and about $270 million not yet identified. For FY2025—26, the city anticipates CIP spending to exceed $234 million.

At the May 22 budget workshop, council asked staff to add several items that were incorporated into the final document: a six-month extension of the Care Solace mental-health navigation contract, $250,000 added to the fire budget for initial vegetation mitigation work, and formation of two ad hoc subcommittees to study wildfire mitigation and a TCSD fiscal strategic plan. Council also unanimously agreed to accelerate pension liability paydown with a $10 million additional payment in FY2025—26; staff said that will generate roughly $2.4 million in interest savings and shorten the city's paydown schedule by about 18 months.

Staff presented other budget details: the sheriff contract reflects an 11% increase tied to labor agreements; fire department costs rise by 25% owing to a state-imposed CalPERS reduction reversal; the proposed salary schedule includes a 2.3% cost-of-living adjustment per an agreement with Teamsters Local 911; authorized full-time equivalent positions increase to 202. The city also reported minor administrative corrections to the published proposed budget, including a software-duplication error that reduced revenues by about $193,000 and expenditures by $97,000 across funds.

Council opened a public hearing, took no public testimony on the budget item, and approved the final operating budgets and CIP by a unanimous 5-0 vote. Staff said final budget documents will reflect the workshop direction and the administrative corrections described above.

The council also scheduled follow-up workshops later this year on CIP prioritization and housing policy to examine longer-term strategic choices.

Votes at a glance: The FY2025—26 operating budgets, TCSD budget and the five-year CIP were approved 5-0.

Ending: Staff said the final budget with the approved amendments will be posted and implemented for the new fiscal year starting July 1, 2025. The city manager and finance staff will report back on implementation and on the progress of the pension paydown plan.