Milpitas council hears preliminary FY 2026–35 forecast, staff warns of structural deficit

Milpitas — At a Feb. 18 special meeting, Milpitas finance staff presented a preliminary fiscal-year 2026–35 general fund forecast and told the City Council the city faces a structural deficit that will require difficult choices on spending and new revenues.

The forecast presentation, led by Finance Director Caprice Howe and budget manager Alice Birch, reviewed recent accomplishments, community-survey results, economic indicators and a 10-year projection. "We do have a structural deficit," Finance Director Caprice Howe told the council during the discussion, adding that the city should focus on the current year and the next few years while planning longer-term changes.

Why it matters: Finance staff said Milpitas relies heavily on a small number of general fund revenue sources and that salaries and benefits account for roughly 80% of general‑fund spending. Staff outlined options including targeted spending reductions, fee reviews, pursuing new or modernized business taxes, and selective use of one-time funds or reserves while engaging the community on priorities.

Forecast, reserves and short-term options

Finance staf…