Sacramento County reports modest revenue shifts and $46M one‑time cushion for FY26‑27 planning

Sacramento County’s chief fiscal officer reported to the Board on March 24 that second‑quarter estimates for FY25‑26 show small shifts in key revenue lines and an important one‑time settlement that affects next year’s budget planning.

Amanda Thomas summarized projected changes to discretionary and semi‑discretionary revenue streams and department-level net financing uses. Most departments are estimating expenditures below budget; property tax is on target while sales tax is trending slightly higher. The county recorded sizable interim settlement receipts related to behavioral health audits — roughly $19.25 million received in 2025‑26 and additional settlements projected, bringing a projected $22 million in departmental revenue tied to interim settlements.

Why it matters: Because some of the settlement money may need to be repaid as audit paybacks, staff recommended reserving a portion ($14M) for audit payback contingencies and adding that to the existing audit reserve. After accounting for the settlement‑reserve, estimated department net reductions and a customary 15% prudence margin, staff estimated roughly $46 million of one‑time fund balance available for FY26‑27 appropriations — a helpful, but limited, cushion against an ongoing projected structural gap of about $101 million.

Board action: The board received the second‑quarter status report, approved recommended adjustments and the appropriation requests; the motion passed unanimously 5–0. County staff said the board should expect further analysis and advocacy on state actions (including HR1 impacts) and recommended strategies to reduce the structural deficit for FY26‑27.

Next steps: Staff will set aside recommended reserves for potential audit paybacks, continue work to refine the FY26‑27 operating gap and present budget tradeoffs and proposed reductions as required.