San Bruno CFO warns of structural gap, presents options including vacancies, reserves and ballot measures

Nick Piggeros, San Bruno’s administrative services director and chief financial officer, presented a preview of the fiscal year 2026–27 budget and a five‑year interactive forecast to the City Council on April 28, saying the city is facing a short‑term budget gap and a persistent structural imbalance.

“The budget is balanced. Revenues equal expenditures at 68.8 million,” Piggeros said while explaining the FY 2025–26 baseline, then outlined emerging risks that could erode that stability. He identified three principal revenue threats: a potential loss of Vehicle License Fee (VLF) backfill, a tax‑revenue‑sharing reallocation tied to Walmart.com receipts, and uncertainty in county/state allocation formulas.

Why it matters: Piggeros said the city faces a modeled $1.7 million deficit in FY 2026–27 because expenditures — principally salary and benefit increases and rising unfunded actuarial liabilities — are growing faster than revenues. He described three policy levers to address the shortfall: pursue new voter‑approved revenue, reduce services (primarily personnel), or draw on reserves as a one‑time fix.

Key facts and figures presented by Piggeros: - FY 2025–26 general fund: balanced at approximately $68.8 million. - Staffing: about 287 full‑time equivalents across funds; roughly 189 FTEs in the general fund. - Reserves: multiple reserve buckets (budget stabilization target 20% and contingency 10%); the CFO estimated roughly $57.3–$57.5 million in combined reserves/unassigned balances (approximate figure presented in the briefing). - Revenue risks detailed: a $7 million VLF backfill exposure (with roughly $3 million modeled as lost next fiscal year and additional amounts at risk later); a tax‑revenue‑sharing agreement tied to Walmart.com that generates about $8 million annually and could be subject to state reallocation; county allocation adjustments identified as an additional uncertain exposure. - Expenditure drivers: public safety accounts for about 50% of general fund spending (police ~30%, fire ~20%); an unfunded pension payment of about $9.3 million was noted in the non‑departmental line.

Piggeros demonstrated an interactive dashboard that models three scenarios: a best case (no revenue losses and voter approval of a significant revenue measure), a middle case (partial revenue loss and later voter action), and a worse case (immediate revenue losses). He also offered examples of possible revenue measures: a parcel tax estimated at roughly $7 million per year if adopted, a sales‑tax measure similar to Measure G (requiring special legislation), or a smaller package of reforms that might raise about $1 million annually (transfer tax, hotel tax, utility user tax).

Council response and clarifications: Council members pressed for specifics. Council member Hamilton praised the dashboard, asked whether a jump in licenses and permits was project‑driven, and requested detail on transfers in/out; Piggeros said he would follow up with the specific licensing breakdowns and confirmed the two transfers in called out in the presentation were from the gas tax fund (streets work) and Measure G (Clean San Bruno and related operations). Council member Marie Medina sought clarification on the VLF assumptions; Piggeros said the budget models receiving about $4 million next year (i.e., a $3 million modeled loss next year) and that additional amounts could erode in subsequent years if the state does not fix funding formulas.

Actions and next steps: Piggeros recommended the council receive the preview and forecast to inform the city manager’s recommended budget due to be published the next week. He said staff will work with Council members Salazar and Hamilton on a revenue‑measure ad hoc committee to explore options and return recommendations to council for further deliberation. The council did not adopt policy changes at the meeting; Piggeros said staff would provide the full recommended budget and supporting detail in upcoming materials.

Selected quote: “There really are only a few options that we have to balance the budget,” Piggeros said, summarizing the tradeoffs among new revenue, service reductions and reserves.

Outcome: The council received the report and proceeded to additional agenda items. A separate consent vote that evening approved two capital items (EV chargers and downtown landscaping) by unanimous roll call (motion by Council member Hamilton, seconded by Council member Salazar). The budget preview will inform the city manager’s recommended budget publication and subsequent council deliberations.