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Finance staff previews general fund forecast: small surplus in 2026, balanced 2027 under current assumptions, deficit in 2028
Summary
City finance presented an updated general fund forecast driven by modest sales-tax growth, slowing declines in interest earnings, and updated property-value assumptions; staff projected a small 2026 surplus, a balanced 2027 and a 2028 deficit under current wage and operating assumptions.
Finance staff (speaker 14, Elizabeth) presented an updated general-fund forecast and the budget calendar for the 2027 budget cycle.
Staff said the 2026 starting point is the adopted 2025 budget and that updated revenue assumptions—3—3.2% sales-tax growth assumptions and a slower decline in interest earnings—improve near-term revenue projections. Property-assessed-value growth was preliminarily upgraded to 7.1% for 2027 based on county presentations, up from earlier estimates.
On expenditures, staff emphasized that salaries and benefits comprise about 75% of general fund costs and that wage and benefit growth materially impacts projections. The updated baseline forecast shows a modest surplus in 2026, a balanced 2027 (with a planned $3 million annual transfer from the stabilization reserve included in the plan) and a projected deficit beginning in 2028 absent changes in revenue or services.
Staff outlined next steps: continued workshops in April—June, district advisory-board outreach in May, receipt of official assessed valuation notices in mid-June, a formal budget presentation in July and adoption in August. Staff noted the city maintains robust reserves that allow planned transfers under policy and that the finance team will return with CIP and operating-budget details.
