Calabasas council studies options to close a growing structural deficit, staff favors 1¢ sales tax

Calabasas city staff told residents and council members at a Sept. 10 special study session that the city faces a structural general‑fund deficit that will widen without new revenues or large service cuts.

Kendan Meek, the city manager, said staff compiled a 10‑year historical series and used averages to project future revenues and expenses. “Expenses outpaced the revenues year after year,” Meek said, and staff’s model shows “about a $1,300,000 deficit next fiscal year, growing almost at 2,000,000 and then 2.6, 3.34” in later years if no action is taken. He and Chief Financial Officer Ron Ahlers warned the city cannot rely on reserves indefinitely.

Staff described several revenue options and their trade‑offs. A model for a 1¢ general sales‑tax increase was estimated to generate about $5.3 million beginning in the 2027–28 projection year and to restore the budget to surplus in the model. Meek summarized the staff recommendation as either a 1¢ sales tax in 2026 or a phased approach: a three‑quarter cent sales tax in 2026 followed by a possible 3% increase in the transient‑occupancy (hotel) tax later.

Ahlers outlined other tools and constraints. Prop. 13 limits property‑tax adjustments and would require bonds and a very large capital need to change the property‑tax rate; parcel taxes require a two‑thirds voter approval and were modeled as unlikely to generate sufficient recurring revenue at typical parcel rates. The city’s 5% utility‑users tax was shown to generate about $4.1 million; doubling it would temporarily close the gap but would be borne by every resident and business. Staff also modeled business‑license options and said a business license could produce $500,000–$1,000,000 in optimistic scenarios but is constrained by Calabasas’s limited commercial base.

Meek emphasized there is little left to cut without impairing services. Staff’s cost‑savings scenarios suggested $1.25 million in cuts this year would still leave a shortfall the following years; closing the structural gap by cuts alone would require multi‑million‑dollar reductions that would affect public programs and amenities.

Public commenters urged different priorities. Resident Heather Leading, who said 43% of homes on her street were recently burglarized, told the meeting she would rather see more funding for public safety even if library hours are reduced: “If it means cutting the library to 3 days a week, I’m for it.” Another resident, Joe Chilko, urged a time‑limited measure, saying, “If you need it for the next 10 years, I’d be willing to support 12 years with a sunset provision.” Council members and staff warned that sunset clauses can limit funds to one‑time uses, complicating long‑term operations.

Council members signaled broad agreement that the staff had conducted extensive modeling and that revenue measures—especially options that do not directly burden residents such as TOT increases—are likely required. Several council members said they do not support cuts to the sheriff contract and stressed the need for a contingency “plan B” if a ballot measure fails. The council also asked staff to continue refining revenue estimates, to clarify legal thresholds for initiatives versus special taxes, and to provide options that show the distributional impact on residents and businesses.

The study session concluded with staff directed to return with more detailed modeling and implementation pathways. No formal action or vote was taken at the session.