Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Budget topic
No spam. Unsubscribe anytime.
Santa Rosa council hears $17.5 million general-fund shortfall, staff recommends two-year strategy and CalPERS options
Summary
City staff told the council the FY 2026–27 proposed budget shows a roughly $17.5 million structural gap, driven by expiring external funds and rising salary/benefit costs; staff proposed a two-year approach that uses targeted reductions, strategic reserve use and pursuing one of three CalPERS interventions.
City of Santa Rosa staff told the City Council on April 21 that the proposed fiscal 2026–27 budget shows a structural general fund shortfall of about $17.5 million and outlined a two-year strategy intended to avoid abrupt service cuts.
The presentation, led by Verónica from the finance team, said the gap reflects expiring outside funding and rising personnel costs. “The reality is that we have not yet felt the full effect of revenue declines on our budget,” Verónica said, summarizing projections that show reserves falling below the council’s mandated level if no action is taken. Staff emphasized property tax is holding up while sales-tax revenues remain volatile.
Why it matters: the general fund supports police, fire and most municipal services. Verónica told the council that salaries and benefits account for roughly 77% of general fund expenditures and that police and fire together are the largest single drivers of cost. The city previously implemented $15.2 million in reductions and presented a second-stage package that aims to spread remaining reductions across two years to preserve core services.
City consultant Mike Meer outlined three options for addressing the city’s CalPERS unfunded accrued liability (UAL): a refinancing-style approach to restructure payments, use of the Section 115 trust to prefund liabilities, or a hybrid that targets parts of the UAL. Mike said the tools have trade-offs but recommended the first option for initial council action, describing it as a way to “create a more predictable payment structure” over time.
Councilmembers pressed staff on constraints and trade-offs. Councilmember Álvarez asked whether restricted capital funds or Section 115 assets could be used; staff replied that many capital sources are legally restricted and that the city has used a Section 115 trust before but would need to weigh investment-return assumptions and risk. Verónica noted some programs previously funded by county or grant dollars are phasing out, which increases pressure on the general fund.
The presentation included department-level projections, anticipated increases in vehicle and energy costs, and examples of the administration’s two-step approach: smaller, less disruptive reductions in year one combined with a deeper, transparent review in year two. Staff said they will return to the council with more detailed department presentations (police and fire) at study sessions scheduled for May 5 and May 6.
Next steps: staff will refine the reduction package, return with department-level proposals and model the pension options in more detail. The council did not adopt a budget at the meeting; staff scheduled further study sessions and formal adoption hearings ahead of the July 1 fiscal year start.
