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City manager outlines midyear budget adjustments to close $15.4M gap; no layoffs planned
Summary
Staff proposed revisions to the 2026 budget to address an approximately $15.4 million general-fund shortfall, including a merit increase reduction from 3% to 2%, a hiring freeze with phased release, elimination of some vacant positions and no involuntary layoffs; the council advanced the annual appropriation ordinance on first reading.
City staff presented a midyear revision to the 2026 appropriation to cover an approximately $15,400,000 general-fund deficit driven by weaker revenue projections and higher personnel costs.
CFO Caleb Weitz summarized the package of adjustments, telling council the city is taking a conservative revenue approach on sales-and-use tax and photo enforcement revenue, and that higher-than-expected personnel costs contributed materially to the gap. “Overall, there was an approximately $15,400,000 deficit to address in the general fund,” Weitz said.
To close the gap, the proposal reduces the merit increase from 3% to 2%, institutes a temporary hiring freeze with a phased release, captures one-time savings from benefits performance, eliminates some vacant positions rather than pursue involuntary layoffs, and deploys the digital equity reserve to avoid reducing eviction and immigration legal defense funds. The package also includes a small new sales-tax auditor position expected to generate net revenue and targeted funding for ongoing projects such as Halligan mitigation credits and Customer Information System legacy support.
Council and staff clarified staffing and reassignment items related to environmental-services positions; staff said a general-fund–funded lead specialist was retasked to a 2050-tax-funded role, creating one unfilled general-fund position and a related reduction in project-management capacity.
The council moved to adopt on first reading ordinance 186 (annual appropriations and 2026 budget adjustments); the motion passed on a 5–0 roll call that night. Staff said the appropriation exhibits list the detailed proposed reductions and the city will return with further detail as required by council.
Why it matters: the package balances fiscal prudence with service continuity, emphasizing no involuntary layoffs while trimming costs and pacing hires. The adjustments will affect departmental capacity and planning into 2026.
What’s next: ordinance 186 passed first reading and will return for a further reading consistent with city procedures; staff will continue to provide line‑item detail and answer follow-up questions requested by council.
