Coachella staff flag $1.35M general-fund shortfall; equipment priorities and rate pressures proposed

City finance and department heads presented a high-level FY 2026–27 budget preview May 5 that identified a preliminary general-fund shortfall of about $1,350,000 and proposed prioritized equipment purchases and rate changes to address operational needs.

Finance Director Lincoln Bogart told council the city projects roughly $45.5 million in general fund revenues, with about $31 million coming from taxes and $10.7 million in transfers. He said a newly implemented 2 CFR 200 cost-allocation plan shifts certain support-service costs into the general fund, increasing salary and benefits lines while offsetting them with transfers. "We are projecting this year or this next year general fund revenues around 45 and a half million dollars," Bogart said.

Bogart warned that deferred community facilities district (CFD) assessments are a growing budget pressure: staff estimate roughly $2.9 million in deferrals at the end of the current fiscal year and about $4.0 million by the end of next year; if current deferred projects ran the full 55-year term with no payoffs, cumulative deferred assessments could approach $117 million — a long-term, not immediate, liability.

Public Works requested four pieces of equipment (a 6,500-pound telehandler, a Bobcat skid steer, a street sweeper replacement and a landscape tractor), and recommended prioritizing two purchases this fiscal year because rentals have become frequent and costly. Utilities staff asked for a backhoe replacement, a commercial dump truck (estimated around $180,000), a valve-turning unit and a portable CCTV sewer camera. Utilities staff said contracting out CCTV inspections currently costs roughly $1,800–$2,000 per inspection; buying a portable unit would reduce recurring contractor payments over time.

Staff also reviewed enterprise fund results and a rate study. Bogart said the water enterprise could face an operating cash-flow deficit of approximately $1.6 million this fiscal year and $3.1 million next year absent rate increases; the rate study’s worst-case scenario to self-fund chromium-6 capital without outside grants would require roughly a 131% water rate increase. For sanitary sewer, staff estimated a required increase of about 35% absent additional funding.

Council members generally expressed support for returning with full budget schedules and asked staff to model the equipment purchases and public-safety proposals in the May budget packet so council can see tradeoffs and timing ahead of the June adoption meeting. Staff said they would include the prioritized equipment and program options in the draft budget return and provide more detail on the 2 CFR 200 cost-allocation calculations and timing.

The study session adjourned at 8:08 p.m.; no formal budget actions were taken that evening.