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Cerritos council confronts $2.9 million budget shortfall as debate over priorities intensifies
Summary
City staff presented a preliminary FY25-26 budget showing a $2.9 million shortfall. Council members pressed staff on causes (a sales-tax forecast revision), deferred maintenance, CCPA operating losses and possible responses including water/sewer rate changes, revenue strategies and a consultant study on a sales-tax measure.
The Cerritos City Council spent the bulk of its May 22 meeting on a preliminary FY 2025–26 budget that staff said currently shows a $2.9 million shortfall.
Director of Administrative Services Drew Schneider told the council that an updated sales‑tax forecast from the city’s consultant reduced revenue estimates by about $1.8 million compared with the version in the published budget book, accounting for most of the swing from $1.1 million to $2.9 million in the deficit. Schneider described the forecast change as a conservative adjustment based on national and international economic conditions and lower auto sales projections.
The council’s discussion ranged across revenue and expense issues. Mayor Frank Yokoyama and Councilmember Hong pressed staff for clarity on the forecast, and asked what actions had been taken since voters rejected a sales-tax measure (Measure C) in 2020. City staff said they were pursuing multiple steps: a water and sewer rate study with a consultant (planned to return in July), a comprehensive non‑enterprise rate and fee study (RFP issued), and active outreach to attract hotel development and other revenue sources.
The meeting also focused on the Cerritos Center for the Performing Arts (CCPA), which the finance presentation projected would have a net operating impact of about negative $2.6 million in the FY25-26 budget. Council members and public commenters debated the theater’s contribution to the local economy versus its direct cost to the general fund; staff said an economic impact study of the theater is in the strategic plan and proposals to study it have been solicited.
Council proposals to address the shortfall included targeted service reductions, reallocating reserves, accelerating revenue studies and, at Councilmember Pulido’s request, directing the city manager to engage a consultant to study sales‑tax feasibility. Pulido emphasized that such a study would not be a vote for a tax measure but would provide professional analysis for the council’s consideration; multiple colleagues expressed support for beginning that discussion.
During budget line-item debate, the council also considered event scheduling and community funding. Mayor Pro Tem Johnson proposed replacing the Autumn Moon Festival and a multi‑evening Santa float with a Lantern Festival/Cultural Celebration Day and a one‑day Santa’s Sleigh Day at the CCPA; the council directed staff to further develop proposals and added preliminary budget dollars for planning. The council separately voted to remove funding for the Cerritos Regional Chamber of Commerce from the FY25‑26 program.
Council also voted to direct staff to work immediately on water and sewer rate adjustments; staff said the schedule to bring proposals and required public actions would be aggressive but feasible and that implementation could occur in 2026 if directed. Staff reiterated the city has reserves and that it will continue to monitor and adjust the budget as the fiscal year evolves.
What happens next: staff will return with refined fiscal analyses (sales-tax consultant input, water and sewer rate recommendations, and additional budget study materials), plus economic-impact and feasibility studies requested by the council.
