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Five‑year forecast warns Carmel-by-the‑Sea could exhaust reserves by 2029–30; council orders cost clarifications and budget scenarios
Summary
City staff warned that under current service levels and a roughly $10M annual CIP plan the city's available fund balance could be exhausted in fiscal 2029–30; council asked staff for more detailed project costs, a concise list of operating‑cut options and a small set of what‑if budget scenarios (including an 85/15 revenue/CIP split) ahead of the May draft budget.
Carmel‑by‑the‑Sea city staff told the City Council March 24 that the city's five‑year forecast shows revenues growing more slowly than operating and capital costs and — if no policy changes or new revenues are adopted — available fund balance could be exhausted in FY2029–30.
Jamie, the finance presenter, walked the council through revenue assumptions (flat to slow growth for property, sales and transient occupancy taxes), major expense drivers (salaries and benefits, escalating pension obligations, services and supplies tied to CPI), and how the forecast treats capital outlays. "If we continue down the road of a roughly $10 million CIP with the service levels and staffing where they're at and no new revenue, that's where we end up," Jamie said.
Staff emphasized that deferred maintenance dominates the near‑term CIP: roughly 80% of next year's proposed CIP addresses deferred maintenance needs and the five‑year plan includes a long tail of projects estimated at tens of millions of dollars to remediate accumulated backlog.
Council members pressed staff for transparency on several headline costs. Councilmember Jeff asked for a clearer derivation of the operating/CIP percentages and for the staff to show how the stated $6.12 million in "additional" CIP above the 10% policy was calculated. Several members and residents questioned a placeholder $38 million figure for a police/public‑works facility; staff said the figure is a rough, market‑informed ballpark and that financing and policy choices (debt vs pay‑as‑you‑go) would determine whether annual debt service counts inside the 10% CIP target.
Residents and commission representatives raised specific infrastructure priorities: beach sand ramp repairs and coastal bluff stabilization after winter storms, street resurfacing and micro‑surfacing cadence, and park/facility deferred maintenance. Public Works staff said many of these coastal projects will require geotechnical study, permitting and phased design work, and that design and permitting costs explain why projects can show modest near‑term line items with larger construction tails.
On the fiscal levers, staff and council discussed three broad options: reduce operating/service levels, scale back CIP (prioritize deferred maintenance), or pursue additional revenues. Councilmembers asked staff to return with more actionable materials before the next meetings: a concise two‑column list that shows where an approximately 5% reallocation from operations to CIP (an 85/15 split) could come from in practical terms, refined CIP cost breakdowns for major headlines (police facility, beachfront emergency repairs, and mission trail work), and a small set (three) of what‑if scenarios illustrating implications for fund balance and service levels.
City Administrator Brandon asked that council members coordinate visits or project site walks through his office so staff can manage those site reviews and provide context. Staff also reiterated they will maintain a public Q&A document through the budget season to collect and answer follow‑up questions.
What this means: The forecast offers staff and council a decision point in April–May — accept the current policy of allocating roughly 10% of revenues to CIP, or adopt a higher CIP share and/or new revenue measures to prevent reserve depletion and address the city's deferred maintenance backlog.
