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Modesto unveils draft FY 2026-27 budget, outlines $50.9M Measure H spending plan
Summary
City Manager and budget staff presented a draft $674 million citywide budget for FY 2026-27, highlighting a proposed $50.9 million Measure H spending plan (including $7.6M in new one-time programs), a projected Measure H year-end balance of roughly $23M, and staff plans to return with formal reserve and transfer-cap policies.
Modesto's Finance Committee reviewed the city's draft fiscal year 2026-27 operating and multi-year budget at a workshop April 20, where city managers emphasized a cautious approach that preserves core services while funding one-time capital and program priorities.
"We're pleased to be before you tonight presenting the fiscal year 26-27 budget," City Manager Joe Lopez said, framing the draft as a refinement of the two-year budget cycle adopted last year. OP&B Director Steve Christensen presented revenue and spending details, reporting General Fund proposed revenues of roughly $215 million and total expenditures of about $215.6 million.
Christensen said the city expects increases in property tax ("about 3.3 million") and sales tax ("about 1.6 million") for 2026-27, attributing some gains to housing market appreciation and inflation-driven price growth. He said the budget includes modest programmatic additions while most year-to-year expenditure increases reflect salary and benefit growth and internal-service fund adjustments.
On Measure H, the one-cent sales tax approved by voters, Christensen outlined a spending plan totaling $50.9 million for 2026-27. "We're proposing about 7.6 million" in new one-time program funding, he said, with the plan also covering $13.1 million in transfers to the General Fund to help close structural gaps and $2 million to supplement ARPA losses. Staff projects an unassigned Measure H balance of about $23 million at year-end and said they will return with a Measure H fund balance/reserve policy and a recommended cap on transfers to the General Fund.
The Measure H package described to the committee includes parks preventive and deferred maintenance ($1.6 million), $3 million to complete Phase 1 of the community's "Awesome Spot" playground, funding for buyouts of previously leased fire engines and trucks, support for the Modesto Gospel Mission safe-sleeping program, and a proposal to convert some contracted rental-housing inspection work into city staff positions.
Budget Manager Casey Culbertson summarized other major funds, noting that a larger wastewater borrowing program (bond issuances) and new Measure H items explain the majority of an overall citywide proposed increase to about $674 million; excluding those items, the operating budget change is roughly 1 percent from last-year projections.
Committee members pressed staff on reserve levels and long-term gaps. Christensen said the city's general fund emergency reserve currently stands around $18.9 million and that staff aims to reach a best-practice target of roughly two months of operating expenditures (about $26 million). He and Lopez warned that fully eliminating the structural deficit without major program cuts would likely require reducing public-safety staffing, which the Measure H revenues were intended to stabilize.
Next steps: staff will return with the formal Measure H reserve policy, a recommended cap on transfers to the General Fund, and more detailed departmental line items during the remainder of the budget workshop schedule.
