Soledad staff present balanced $48.7M budget but warn reserves are tight
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Summary
City staff presented a balanced $48.7 million operating budget and five‑year capital plan June 12, 2024, but warned slowing sales tax, rising costs and a steep Cal Fire contract increase will leave little discretionary money and could require new local revenue to sustain services.
City of Soledad staff presented a balanced FY2024–25 operating budget of $48,700,000 at a June 12 special budget workshop, while urging council members to prepare for tightening finances in the coming years.
Finance staffer Mike Howard told the council the document being proposed for adoption next week reflects a status‑quo operating posture but flagged several structural pressures: a consultant forecast of a modest sales‑tax downturn for the next two fiscal years, rising staffing and capital costs, and an impending jump in the city’s Cal Fire contract. “Our total operating budget this year is $48,700,000,” Howard said during the presentation. He also cautioned that the budget as presented leaves little room to add to reserves: “We are spending every dollar.”
Why it matters: sales tax makes up more than 30% of Soledad’s revenue, so a sustained softening would reduce the city’s ability to fund public safety, infrastructure and other core services. Howard said the city has built a $2,000,000 council reserve and a capital projects fund (about $6.7 million), but without new revenue the combination of contract and capital needs would exhaust discretionary funding.
Key details: Howard described the budget as balanced after accounting for one‑time carryovers, but noted specific stress points. The general fund totals roughly $15,000,000 with about 67% of that paying salaries and benefits; the remainder covers supplies, services and a small amount of capital. Howard said the budget assumes limited growth in property tax and modest expectations for sales tax based on consultant HDL’s forecasts. He reported the city’s unfunded pension liability was “just over $6,000,000” as of last year and that actuarial updates are due in August.
Staffing and positions: the budget includes a small number of reclassifications designed to increase operational flexibility—code enforcement and animal control roles will be reclassified as community service officers (CSOs), and a new water reclamation operator funded from the sewer fund is proposed. Howard said the proposals were costed and vetted with human resources staff prior to presentation.
Capital program and enterprise funds: the five‑year capital improvement plan includes community center modernization, a water reclamation storage facility, a new fire bay and citywide street maintenance (crack seal/slurry). Howard noted enterprise funds (water, wastewater, garbage) operate separately from the general fund and highlighted that the water fund projects about $4.3 million in revenue against $4.5 million in expenditures this year, driven by capital spending. He recommended earlier rate studies for water and sewer to maintain fund health and meet covenants.
Council next steps: staff will ask the council to formally adopt the budget at the next meeting and to approve position allocations and an updated salary schedule; ratification of certain employee agreements is expected to follow in July. Howard urged the council to begin discussing options for new revenue—particularly to cover rising public safety costs—while preserving the city’s reserve policies.
What’s next: the council is scheduled to consider adoption of the FY2024–25 budget at its next meeting; staff said additional details and studies (impact‑fee and cost‑allocation studies, and enterprise rate studies) will be presented in coming weeks.
