South Gate — City staff told the South Gate City Council on Nov. 11 that the city faces a structural budget shortfall projected at roughly $8 million to $9.4 million for fiscal year 2026–27 unless it finds new revenue or makes steep cuts.

The report, given by Finance Director Louis and framed by City Manager Rob, described how one-time sources such as American Rescue Plan Act (ARPA) funds and reserve draws have masked a recurring gap. Louis said the city’s operating costs are rising faster than revenues and that the current adopted general fund is roughly $80 million; staff estimate revenues of about $70.9 million against $78 million in budgeted expenditures for FY25/26.

Why it matters: the general fund pays for core services — notably policing and parks — and staff warned that approximately 55.6% of the general fund goes to the police department and about 16.5% to parks and recreation. Without action, the council would need to consider cuts that could affect minimum staffing for patrols, dispatch coverage and dozens of community programs.

Staff laid out options for closing the gap: recalibrating the existing Street Lighting & Landscaping Maintenance District (currently subsidized by the general fund to the tune of about $1.6 million), raising the transient occupancy (hotel) tax, adjusting fees and fines and pursuing a Utility Users Tax (UUT). Louis said the UUT — a locally approved percentage charged on utility bills (water, electricity, cable, sometimes internet) — could generate an estimated $9 million to $13 million annually depending on the rate chosen. He offered household examples showing 7–10% UUT scenarios and explained many neighboring cities already collect a UUT.

“We’re at a fiscal crossroads,” City Manager Rob said during the presentation. “We can preserve current services if we find additional revenue, or we face painful cuts.”

Public reaction: more than a dozen residents urged the council not to cut youth programs or public safety. Pablo Cifuentes, a longtime resident, said, “Please do not cut back on youth sports, and please do not cut back on public safety.” Several AYSO and youth-sports coaches described parks and fields as vital to keeping kids engaged and urged the council to pursue new revenue rather than program reductions.

Council response and next steps: council members and staff agreed to prepare two budget scenarios — one assuming new revenue (for example, a UUT) and a second reflecting significant cuts — and to expand community outreach. Staff recommended preparing both budgets early so the council could present residents with a clear choice if it places a measure on a ballot. City Treasurer de la Paz recommended pursuing a rate in the neighborhood of 9% as a scenario to consider.

Timing and process: staff explained that putting a UUT on a June ballot requires the council first to declare a fiscal emergency (a two-step process that in some cases requires unanimous support to declare), while placing a question on the November ballot requires only a simple majority vote to place it. Staff cautioned that if the council waited until November, the city would face extended cash‑flow pressure because newly approved UUT revenues can take months to arrive and would likely require deeper cuts starting July 1 unless reserves are used — a move staff said they strongly recommended avoiding.

Numbers and fiscal context (as presented by staff): the general fund is about $80M; projected revenues for the current fiscal year are $70.9M versus $78M in budgeted expenditures; the structural shortfall is in the millions (staff estimated $8M–$9.4M for FY26/27); the city’s total reserves across buckets are roughly $20M (emergency reserve ~$13M; budget stabilization reserve ~$3.8M). Staff reported using roughly $2.8M of reserves in the current budget cycle.

What was decided: the council voted to receive and file the presentation and directed staff to return with a timetable and outreach plan; staff will prepare two budgets — one with new revenue assumptions and one with the cuts necessary if new revenue is not approved.

What’s next: staff plans more community education (one‑page summaries in English and Spanish, presentations to commissions, civic groups and social media outreach) and to return to council with a calendar of ballot deadlines and budget development milestones. The council signaled it expects more hearings and a focused discussion about UUT mechanics and voter outreach before deciding whether to place a revenue measure before voters.

Sources: presentation and Q&A at the Nov. 11 South Gate City Council meeting; direct quotes and figures are from City Manager Rob and Finance Director Louis.

Ending: Councilmembers said they want the community to have the facts before any vote; the council received and filed the report and will return with detailed timelines and the two budget scenarios for further council direction.