Hayward City Council on Jan. 6 set a Feb. 28 budget retreat and heard a detailed budget update that staff says balanced the current fiscal year but left the city with little margin for error after a large use of reserves.

City Finance Director Deanna Hillbrantz told the council staff used a combination of measures to balance the budget, including a $3,850,000 loan from Measure C, service-and-supplies reductions of roughly $2.7–$2.8 million, access to the OPEB trust (up to $3 million) and about $8.3 million in personnel-related savings from concessions, voluntary separations and layoffs. Hillbrantz urged caution: “the budget itself is balanced, but there's no room for anything unexpected.”

The update prompted debate over both near-term and structural steps. City Manager Ott said staff has engaged a consultant, billed on a time-and-materials basis, to build a fiscal model for a modernized business license tax and to run scenarios for council direction. Ott said the contract can be stopped if the council decides not to proceed: “the contract's there to help us through all the decision making… but we can stop early and terminate that contract.” Staff recommended quick polling if the council wants to keep a November ballot option open and said a more detailed update on the business license tax would come to the Jan. 20 meeting.

Council members proposed a mix of revenue and cost approaches. Council member Andrews urged short-term reviews of workers’ comp and internal service funds, pausing nonessential capital projects and exploring property disposition to generate revenue. Mayor Pro Tem Siro emphasized partnerships with HART and better enforcement of short-term rental rules to protect hotel demand. Council member Bonilla proposed a disciplined, data-driven process—reviewing contracts above a suggested $250,000 threshold and applying a risk-informed framework to prioritize core services.

Public speakers sharply criticized some recent decisions and urged different priorities. Donna T. said recent approvals for a new cannabis dispensary at a former Walgreens location risk repeating past harms to Black and Brown neighborhoods and warned about expected cannabis revenue shortfalls. Hotelier Sajid Qadri, owner at the Best Western Plus Inn of Hayward, said hotel occupancy and room rates remain depressed and argued that raising the hotel occupancy tax now would harm struggling local hotels. Labor and union advocates urged the council to use Measure C funds and other one-time revenues to protect jobs and to be transparent about the financial path forward. Daniel Arnold, who identified himself as the partner of an employee scheduled for layoff, told council members the responsibility rests with elected officials and said the only way to show true solidarity with laid-off employees would be to resign.

Council members and staff repeatedly returned to the question of trust and transparency. Several members asked staff to provide clear, shareable materials explaining how the city reached figures such as the 94% of revenue going to salaries and the reserve reductions that reached roughly $30 million. Staff said they will provide a five-year forecast, budget-to-actuals and additional follow-up materials at the Feb. 28 retreat and an interim update on Jan. 20.

Next steps: staff will return Jan. 20 with more detail on the business license tax timeline and the consultant’s work plan; the council will hold the full budget retreat on Feb. 28 to consider revenue scenarios, a draft budget policy and structural recommendations. The council adjourned and set its next regular meeting for Jan. 20, 2026, at 7 p.m.