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Montclair council adopts FY2025–26 budget but reserves fall short of city goal
Summary
The City Council adopted a balanced FY2025–26 operating budget (5–0) that projects a $540,554 net surplus and a $6.5 million unassigned reserve (16.55% of appropriations), below the council's 25% target; officials warned rising CalPERS costs and slower tax receipts will shape future budgets.
The Montclair City Council voted unanimously to adopt the city's FY2025–26 operating and housing authority budgets, approving a plan that staff says produces a modest net excess while leaving the city's unassigned reserve below policy targets. The electronic vote recording shows adoption 5–0.
City staff presented a budget that projects a net excess of general fund revenues over appropriations of $540,554 and an estimated unassigned general fund reserve of about $6,500,000 at June 30, 2026, equal to roughly 16.55% of operating appropriations, below the council's stated 25% minimum. "The fiscal year 2025–26 budget, as presented, has a net excess of general fund revenues over general fund operating appropriations in the amount of $540,554," the presenter said during the overview.
Why it matters: council members and staff said the city faces a combination of slower sales- and transaction‑use tax receipts and rising pension (CalPERS) costs that will tighten future budgets even if the current plan balances. Staff emphasized that sales and transaction/use taxes remain the largest revenue components and are projected to decline year‑over‑year before a modest recovery in mid‑2026.
Budget priorities and tradeoffs: the adopted budget reduces department requests across funds by roughly $4.6 million and trims general fund requests by about $3.56 million. Personnel services account for the largest single portion of appropriations (staff estimated roughly $27.2 million in the general fund, about 68.9% of general fund appropriations). The proposal also funds several reorganizations and position changes intended for succession planning and service continuity, including reestablishing an information technology manager and human resources manager, restoring grant‑funded fire positions, and authorizing additional public works and engineering roles.
On pension exposure, city staff warned the council to expect materially higher employer contributions in coming years. "We anticipate that, sometime by 2035, the experiences that we are realizing related to increases to the UAL ... will start decreasing," the City Manager said, while noting near‑term increases will raise the city's costs. Staff explained the budget uses a pension obligation bond amortization fund and special reserves to help smooth near‑term impacts.
Debt and special funds: the presentation summarized annual debt service for the city's bond portfolio (2014 and 2021 lease revenue bonds and a 2021 pension obligation bond) and listed special purpose reserves (CalPERS reserve, technology, parking facility development, Gold Line Betterment, and others) totaling about $31.9 million. Staff also recommended a $120,179 transfer to the contingency reserve fund.
Next steps: with the council's approval, staff will implement the adopted FY2025–26 program and continue pursuing grants and other revenue opportunities, including projects tied to the Gold Line extension and North Montclair development. The council agreed to continue monitoring CalPERS costs and to consider further fiscal adjustments if economic conditions deteriorate.
Vote at a glance: Motion to adopt the consent calendar (which included the FY2025–26 budgets) was made by "councilor Roo," seconded by "mayor Proton Martinez," and adopted by electronic vote, 5–0.
The council moved immediately to appointments and other agenda business after the vote.
