Santa Rosa starts FY 2026–27 budget season; CFO warns of a growing structural deficit
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Summary
CFO Scott Wagner told council the city faces a structural deficit despite recent reductions and one‑time infusions; staff outlined prior actions (54 position reduction, $15.2M ongoing reductions) and forecasted a multi‑million dollar deficit to be refined during budget season.
City financial staff opened the fiscal‑year 2026–27 budget season and warned the council that Santa Rosa continues to face a structural deficit that will require additional actions.
Scott Wagner, the city’s chief financial officer, said council took substantial actions in the past year — including $10.4 million in one‑time monies to shore up reserves, $15.2 million in ongoing reductions and a workforce reduction of 54 general‑fund positions — but that those measures will not eliminate a structural shortfall projected for the coming year. "We expect that structural deficit to grow," Wagner said, adding that early estimates put the upcoming year’s gap in the $15–20 million range though staff would update that number as they refine revenue and expenditure forecasts.
Wagner identified two primary drivers: stagnant sales‑tax revenue (city sales tax is at roughly the same level as three years ago) and rising salary and benefits costs, including the doubling of the CalPERS payment over the past five years. Wagner told the council that the city’s reserve position improved slightly after final audit numbers were completed for FY24‑25, but noted the council would need to address long‑term structural issues in coming budget deliberations.
Budget manager Veronica Connor outlined the schedule for outreach, the midyear update and key dates: department budgets will be reviewed in May, a comprehensive draft budget will be published in early June and a final adopted budget is expected by mid‑June. The charter‑required public‑hearing process and an online comment portal were announced.
Councilmember McDonald asked whether the previously announced 54 position reductions were layoffs or vacancies. Wagner said it was a mix and later provided a split: 15.8 filled and 38.2 vacant (staff indicated they would provide a fuller breakdown). Several councilmembers urged staff to prioritize protecting core services and asked for vacancy and overtime data to guide decisions.
Next steps: staff will refine deficit estimates, supply the requested vacancy/layoff breakdown and begin department budget reviews and public outreach.