Acting City Manager (name not specified) told the San Luis City Council on a five-year projection review that the city must move beyond one-year budgeting and secure recurring revenues to sustain services.

"A true structurally balanced budget is one that supports financial sustainability for multiple years into the future," the Acting City Manager said, summarizing the administration’s three commitments: financial stability, efficiency and accountability, and strategic planning.

Rola, the finance presenter, said the FY26 general-fund budget includes $35,100,000 in revenues and $39,700,000 in expenditures, producing a net deficit of $4,600,000 that would require the city to draw on reserves. She emphasized the city's tax base is concentrated: city sales tax and state-shared revenues together account for the vast majority of general-fund receipts.

Rola summarized the five-year outlook: while the city is maintaining a six-month operating-reserve policy, the ending fund balance net of reserves trends negative by fiscal year 2028 and reaches a larger shortfall by fiscal year 2030 unless the city secures new recurring revenue or reduces ongoing costs. She also noted construction costs have risen substantially, reducing the buying power of grant and HEERF-funded projects.

The presentation reviewed each fund: Rola said the highway-user fund relies on state-shared gas taxes and general-fund transfers (impact fees are restricted to capital and cannot be used for operations); the water fund remains positive on a five-year projection but faces periodic cash pressure tied to capital spending; the wastewater fund will finance a planned West Water Treatment Plant expansion with debt; and the ambulance and solid-waste funds both show operating pressure, with the solid-waste fund starting FY26 below reserve policy.

On wastewater financing, a council member asked whether a WIFA loan of $26,240,000 (with roughly $1,500,000 in forgivable principal, according to council comment) had been received. Rola said the city is "processing the loan documents" and expects to bring WIFA loan approval to the council at the next meeting for formal action.

Acting City Manager and staff outlined possible responses: pursue grants, diversify revenue sources (including a countywide transportation sales tax that would require voter approval in Yuma County), update long-unchanged fees (business license, park fees, permit and administrative fees), pursue operational efficiencies, and require departments to justify discretionary spending. The manager gave examples of small-fee changes that would be revenue-neutral to slightly positive (payment-card pass-through fees, fingerprint and parking fees, false-alarm fees) and emphasized that fee updates alone would be "pennies" compared with large new revenue sources like a transportation sales tax or property tax.

Council members asked for clarification about the capital-improvement plan and grant dependence; staff said the CIP is expected to be completed by June 30 and that many grant applications previously submitted are unlikely to be funded, leaving only a subset of programs (for example, CDBG) as likely near-term grant sources. Rola also said the draft annual financial report for FY25 had arrived that day and staff expected to finish pending items before the December holidays.

Councilor Cerri and others pledged to advocate with legislators and to communicate fiscal constraints to the public. Acting City Manager recommended continued outreach to state legislators to avoid further reductions in state-shared revenue and asked council to help explain limits to the public.

The council did not take formal votes on revenue measures during the meeting; staff left the council with a roadmap of options and a recommendation to prioritize needed capital projects and revenue diversification.