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Auditor presents FY26–27 work plan as council begins early budget review amid $66.2M gap
Summary
The city auditor presented a proposed FY 2026–27 work plan that includes six new audits (homeless response, police overtime, code enforcement, downtown walkability, urban forestry, and financial management); the council approved the plan as staff and charter officers outlined approaches to close an estimated $66.2 million deficit.
The City Council heard the city auditor’s proposed FY 2026–27 work plan and an early budget briefing that characterized a significant structural deficit. City Auditor Farish Dharari outlined how the office developed the plan with input from the Budget and Audit Committee and listed six new audit projects recommended for next year.
"The recommendation that is before you today is to review my proposed work plan for fiscal year 26, 27 and pass a motion approving it," Auditor Farish Dharari said. The proposed new audits include evaluations of the city's homeless response protocol, the police department’s overtime practices, community development code enforcement operations, downtown walkability and street‑design priorities, urban forestry operations, and a detailed review of financial management and budgeting practices that could include an internal assessment and targeted external forensic work.
Finance Director Pete Coleto opened the session with a baseline forecast that showed a roughly $66.2 million structural deficit and outlined other risk factors, including ongoing labor negotiations. "We are forecasting a $66,200,000 deficit we have to close in the coming fiscal year," Coleto said, noting the number could increase depending on pending factors.
Council and staff discussed prioritization and resource tradeoffs; several council members urged preserving the auditor's staffing so the office could complete the work plan. The council moved and approved the auditor's work plan.
A large public comment period during the overall budget session focused on restoring previously approved funding for a public‑bank feasibility/business‑plan study (often referenced as $250,000 tied to AB 857). Multiple speakers, including community organizations and longtime residents, urged the council to restore that funding and proceed with a public‑bank evaluation as a tool to support small business lending, affordable housing and local climate goals.
Council took no final budget actions at this session; staff said a proposed budget will be presented in April with hearings planned in May and June ahead of a planned June adoption.
