Santa Maria council adopts first-quarter budget amendments to reduce a $25.1M structural gap

The Santa Maria City Council on Jan. 20 received a budget rebalancing analysis from Finance Director Rebecca Campbell and adopted a set of first-quarter amendments intended to address a projected $25.1 million structural deficit in fiscal year 2025–26.

Campbell told the council staff had identified about $20 million in potential reductions and proposed $12.5 million in amendments for the current fiscal year, of which $8.7 million are ongoing and $3.8 million are one-time reductions. She said those actions — combined with other identified measures to be considered in the next budget cycle — aim to reduce reliance on one-time reserve funds and move toward a more sustainable budget.

Key items presented by staff included:

- Holding 24 full-time equivalent positions vacant (20 full-time and several part-time positions were identified as long-term vacancies); staff said the FTEs would remain on the books and there were no anticipated layoffs.

- $3,795,000 in one-time project holds for fire department projects originally funded by Measure U, including the Fire Station 1 expansion and some training center costs.

- $4.4 million in capital projects proposed to be delayed or put on hold and $8.7 million in ongoing reductions through salary/benefit savings and operating reductions.

- Recognition of rising costs including a 10% projected increase in health insurance premiums and significant increases in workers’ compensation and liability premiums.

Council members pressed staff on which reductions are ongoing versus one-time, how the changes will roll into the FY26–27 starting point, the reliability of a $1 million permit-fee revenue projection, and the process for evaluating vacancies under Assembly Bill requirements. Campbell said ongoing reductions total $8.7 million and that remaining unresolved gaps could range from $10 million to $16 million depending on year-end results.

Several council members expressed concern about preserving public-safety service levels. Campbell and the city manager said public safety is exempt from hiring chill except for some long-term, persistent vacancies; chiefs were consulted before the proposals. Councilmembers emphasized the need to understand direct service impacts to residents before permanent eliminations.

After discussion, the council moved, seconded and adopted the amendments by roll call. The roll-call record shows the motion passed with all council members present voting Aye.

What happens next: Staff will continue budget work, pursue revenue-generation options, update the ADA transition plan for project prioritization, and present department-level program-cost discussions in future sessions as the mid-cycle and biennial budget processes continue.