Placentia council adopts FY 2025-26 budget, directs 90-day plan to close remaining shortfall

The Placentia City Council voted 5'0to'00 on June 3 to approve the city's fiscal year 2025-26 operating budget and capital improvement program, adopting staff's recommendations while directing the city administrator to return in 90 days with options to close the remaining general-fund gap.

City Administrator Jennifer Lattman told the council the budget process began in February after staff "identified a deficit of several million dollars" and that the city had to respond to rising fixed costs such as CalPERS liabilities, pension-bond debt service and higher insurance and contract costs. She said the all-funds expense plan is about $92.7 million against roughly $89.7 million in revenues and that the general fund is projected at approximately $53.5 million in revenue.

The administration proposed several measures to reduce costs and shore up reserves: eliminating four vacant positions, reclassifying certain roles to better match duties, using $1.0 million from a Section 115 trust and about $500,000 of one-time revenue, and continuing a hiring freeze approach for noncritical vacancies. The proposed CIP is roughly $11.4 million, with about $8.4 million prioritized for streets.

Lattman also told the council staff recommended allocating $880,000 to replace the city's fuel tank at the yard, noting removal must occur by Dec. 31 to meet regulatory or contractual timelines.

Councilmembers pressed staff on details. Councilmember Smith praised the staff's work and emphasized the need to protect core services; Councilmember Gabbaguchi sought clarifications about CIP line items and asked to remove or revise projects (for example, a previously listed gantry sign and a fountain renovation that was already closed out). Several members raised concern about using one-time funds for ongoing expenses.

Councilmember (identified in the record) highlighted the importance of keeping the city's Measure U reserve at the promised 25 percent and asked for a plan to address about $10 million in identified facility repairs. Lattman and other staff acknowledged some remaining reliance on one-time resources and said the 90-day report would present options for additional reductions or revenue enhancements.

The motion approved by the council incorporated the reductions discussed at a special meeting the night before (roughly $363,000), confirmed the $880,000 allocation for the fuel tank replacement, and directed staff to return in 90 days with options to reduce a remaining shortfall up to $1.1 million. The motion passed unanimously.

Next steps: staff will prepare a 90-day report with specific options (spending reductions, revenue measures and multi-year roadmaps) for council consideration; the council signaled preference for preserving public safety while pursuing savings and said some changes could be phased through attrition and longer-term plans.

Budget numbers and clarifications: the presentation lists the CalPERS unfunded actuarial liability increase from $447,000 to $917,000 as a major pressure on the budget; the employment-agreement terms for the incoming city administrator (consent calendar item) were summarized in the meeting record and included a base salary of $270,062.28 and up to nine months' severance, should the consent item be finalized.

The council's action authorizes staff to implement the adopted budget components and to return with the 90-day options report for additional council direction.