Fresno council hears sobering midyear budget update; asks staff to continue eviction-prevention intake and to manage hiring requests

Fresno officials on Feb. 25 presented a fiscal year 2025 midyear budget review that showed the city likely will end FY25 with a modest positive balance after accounting for commitments, but the fiscal 2026 base budget is estimated to begin with a shortfall of about $20.6 million.

Budget director Henry Fierro presented the numbers to the council, saying the most important takeaway was the FY26 base projection: "That to me is, the important takeaway," he told the council. Staff reported estimated FY25 operating revenues of roughly $475 million and called out sales tax and cannabis receipts as below earlier budget assumptions; property tax receipts came in slightly higher than the adopted budget.

Key numbers and drivers

- FY25 estimated operating revenues: about $475 million. Sales tax is trailing earlier projections and is the primary downward driver versus the FY25 adopted budget. Property tax growth exceeded the budgeted rate (assessment roll growth was reported slightly above the adopted assumption). - FY25 net ending balance after accounting for incomplete capital commitments was estimated at roughly $6.0 million. - FY26 base snapshot (as of Feb. 4) presented to council shows an estimated shortfall of about $20.6 million if no policy changes or revenue increases are adopted. - Staff noted that American Rescue Plan Act (ARPA) dollars were used in FY25 to cover specific personnel costs: roughly $17.4 million in fire salaries and about $9.6 million in police salary costs in earlier accounting action. Those ARPA allocations had reduced near-term pressure on the general fund but are time-limited and not a sustainable revenue source.

Council action and directions

Council voted 6-0 to adopt the midyear report with two specific directions: allow the administration to continue a constrained hiring slowdown (administrative discretion to approve only essential positions) and to permit the City Attorney's eviction-prevention program (EPP) to continue accepting applications and providing assistance. Councilmembers required that administration and legal staff identify an additional $500,000 in funding sources to cover EPP needs for the remainder of FY25 and bring a funding plan back at an upcoming meeting. Vice President Arias moved the motion and it was seconded; the motion passed unanimously.

Council members said they viewed the EPP funding as a homelessness-prevention measure that is less expensive than responding to newly homeless households. Several members asked for quick analysis and options for the $500,000 shortfall and for a clear list of capital projects that will roll into FY26 so the council can reconcile prior budget motions and district infrastructure allocations.

Additional staff commitments

Staff agreed to provide the council with: - An itemized list of incomplete capital projects (parks and public works items specifically called out) and reconciliation to prior council budget motions. - Options for identifying the additional $500,000 for the EPP program (sources outside of the general fund where feasible); staff said some homelessness-prevention funds exist but may require state approval to repurpose. - Analysis of the revenue sensitivity of sales tax and cannabis receipts and updated FY26 budget scenarios.

Why it matters

The midyear review frames the budget decisions the council must take for FY26. Staff emphasized that the low-cost ARPA allocations played a large role in buffering the general fund this year, but those funds have finite life and cannot be relied upon for ongoing salary costs. Council members and staff discussed a range of mitigations including hiring restraint, seeking new revenue options and keeping core public services funded. "We are already headed in the direction" of slowing hiring, the city manager said, and departments were instructed to limit new requests unless contractually required or related to safety.

Next steps

Staff will return with the requested reconciliations and funding options in advance of formal FY26 budget deliberations. Councilmembers also requested a written memo on the volume and outcomes of EPP cases to date and an analysis of the city's bonding options for planned capital projects (fire station, communications center) and how debt service would be paid.