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Eureka adopts midyear budget amendments after staff warns of $3.7M projected shortfall
Summary
Finance staff reported the city’s projected FY25‑26 deficit widened from $800,000 to about $3.7 million due to personnel and capital overruns, a delayed county CARE contract requiring a local subsidy, and an emergency marine‑fueling replacement. Council adopted midyear budget amendments and directed staff to present a multi‑year reserve‑rebuild plan.
Finance Director Millar told the council the city closed FY24‑25 with a modest surplus that pushed reserves above the policy target, but new pressures in FY25‑26 have reversed that trend. Millar said updated revenue projections were roughly flat while expenditures grew because of higher personnel costs, capital project overruns, and an emergency replacement of the marine fueling facility.
The most consequential item was a delayed contract with the county to reimburse CARE operations, which left the city liable for a temporary subsidy. Millar said the combination of operational pressures and capital overruns raises the projected FY25‑26 General Fund shortfall to about $3.7 million and would reduce reserves below the policy 25% threshold without corrective action.
Council response and action: Council voted 5–0 to adopt resolution amendments to the FY25‑26 budget. Millar said that under the city’s fund‑balance policy staff will return with a three‑year plan to rebuild reserves and presented areas for expenditure reductions and potential revenue options to be analyzed during the upcoming budget cycle.
What to watch next: Staff will report back with scenario analyses and recommended spending adjustments to bring reserves back to policy levels within the required timeframe. Council and staff discussed reliance on sales tax (which has been flat) and the limited near‑term revenue options available.
