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Fullerton ad hoc committee hears $13.7 million FY26-27 shortfall; staff readies audit and new polling for sales-tax options
Summary
City staff told the Fiscal Sustainability Ad Hoc Committee on April 28 that the preliminary FY26-27 budget shows a $13.7 million operating deficit if no further action is taken, and outlined departmental reduction scenarios, a phased independent audit and additional community polling on possible sales-tax measures to close the gap.
City Manager Matt Manfro told the Fullerton Fiscal Sustainability Ad Hoc Committee on April 28 that the citys preliminary fiscal year 2026-27 budget shows a projected $13,700,000 operating deficit if no further reductions or revenue actions are taken.
The deficit figure was presented as a baseline before any of the additional cost-saving options staff described, Manfro said. He also announced that the council had directed an independent audit by Grant Thornton Advisors; phase 1 has begun and the council will consider authorizing a broader phase 2 performance-and-organization review, which staff estimated would cost about $130,000.
"That audit is getting started," Manfro said, adding that the work would occur in phases. He said staff would present poll results and methodology at the committees next meeting after a second round of community polling is completed.
Interim Administrative Services Director Steven Avalos outlined the committees recent history and prior council direction on ballot measures. Avalos said the ad hoc committee had previously developed budget-balancing recommendations that included testing two half-cent sales-tax measures: one for infrastructure and one for public safety. The council voted 5-0 to continue only with the two dedicated half-cent options, he said.
Avalos and other department heads described earlier cost-containment steps: the city implemented a 3% salary reduction exercise this fiscal year, which staff said reduced the shortfall to about $3.7 million under certain accounting assumptions. However, Avalos cautioned that the earlier reductions were "a first pass" and that the $13.7 million baseline reflects contractual obligations and no additional reductions.
Department directors described what further 5% or 10% reductions would mean in practice and highlighted trade-offs: many general fund costs are fixed, particularly salaries and benefits, and deeper cuts risked service reductions or increased liability. Staff estimated a typical polling round costs roughly $40,000.
Chair Rosa said the committee will review poll results and audit recommendations at its next meeting, and that staff had committed to posting the full slide deck and completed polling data before the follow-up session.
The committee did not take any formal votes on April 28. The next meeting is scheduled for May 14 at 6 p.m.
