Hayward Council adopts staff plan to close roughly $26 million shortfall, authorizes Measure C transfer and labor negotiations

Hayward’s City Council on Nov. 18 voted unanimously to adopt a staff‑recommended set of budget amendments and actions aimed at closing a projected $26.4 million shortfall in the city’s general fund for FY25–26.

The measures approved include a recommended one‑time transfer of $5.9 million from Measure C, and a $3.85 million interest‑free loan from Measure C to be repaid over 15 years; identification of about $1.9 million in transfers from other funds; departmental 5% reductions in supplies and services; additional vacancy and overtime controls; an offer of a voluntary separation incentive program; and direction for staff and labor partners to seek approximately $6.7 million in personnel‑related savings. Mayor Mark Salinas moved the staff recommendation; Mayor Pro Tem Tim Roach seconded the motion and the council recorded a 7–0 vote in favor.

Why it matters: Finance staff told the council that FY24–25 actuals materially undershot projections and that personnel costs have grown to consume a very large share of the general fund. Finance Director Diana Hillbrands said the city started the year expecting an $8.9 million deficit after prior adjustments but that a combination of lower revenues and higher payroll‑related costs left the city facing a much larger gap: “If we weren’t to make any additional steps … we’re looking at another deficit around 26,400,000.0.”

Council and staff framed the approved package as an urgent, interim response while the city completes a longer‑term fiscal sustainability plan. Assistant City Manager Mary Thomas and Hillbrands said staff would present a multi‑year financial model, updated projections and proposed policy changes at a February work session, and provide monthly budget‑to‑actual reporting to council in the meantime.

Labor, public safety and service impacts: Public commenters — including representatives from SEIU and IFPTE Local 21, dispatchers, library staff and HAIM — pressed the council to prioritize Measure C funds and revenue options rather than personnel concessions. Danny Magalas, president of HAIM, said unions were willing to work with the city but warned against unilateral concessions: “This deficit was created by executive mismanagement and decisions made by the elected officials, not by the workers you’re asking to pay some back.” Several speakers representing the Hayward Communication Center and library staff warned of immediate service reductions if per diems and temporary staff are eliminated.

Council responses and next steps: Multiple council members acknowledged mistakes in prior years’ budgeting and emphasized the need for greater transparency. Mayor Salinas said the decision to act was painful and personal: “I feel I failed. I really do.” Council members requested monthly budget–to–actual reports, quarterly reviews of all funds (including internal service funds), and a February session on structural reforms and revenue options such as possible business license updates or a TOT adjustment. Staff said the audit for the prior fiscal year is ongoing and that outside fiscal reviewers are assisting the city.

Formal action and provenance: The council authorized amendments to the FY25–26 operating budgets, delegated authority to the city manager to reduce appropriation levels and adjust transfers consistent with the adopted package, and affirmed cost‑control measures to be implemented by Jan. 31. The budget presentation and council debate began in the agenda packet at item 6 and were discussed on the record between SEG 537 and SEG 3619 of the Nov. 18 transcript.

What remains unresolved: The city is using one‑time and loaned Measure C funds to cover a portion of the gap this year; staff and council said they will return with a longer‑term plan to pay back Measure C and rebuild reserves. Many details remain to be finalized through labor negotiations, the February work session and the pending audit.