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San Rafael staff preview FY 2627 budget, outline $1.65 million gap and balancing plan
Summary
City staff told the Finance Subcommittee that updated revenues modestly improved the FY 2627 outlook but left an estimated $1.65 million general-fund gap; staff proposed reallocations, a set of balancing measures and limited one-time spending while holding to a 15% reserve target.
San Rafael city staff previewed the preliminary FY 2627 proposed budget on May 12, telling the Finance Subcommittee that updated third-quarter revenue results improved the outlook modestly but that a funding gap remains.
The subcommittee’s presenting staff member (Director) said updated revenues were “slightly favorable, relative to what we shared with the council at the midyear,” driven largely by stronger-than-expected local sales tax receipts from the auto sector. The improved receipts reduce the near-term draw on general fund balance compared with earlier projections but do not eliminate an out-year structural shortfall.
The Director said the baseline general fund shortfall has moved from roughly $2.0 million toward a $1.0 million position for FY 2627 after favorable revenue and one-time adjustments, but proposed augmentations (about $650,000) and remaining pressures leave an estimated funding gap of about $1,650,000 that the staff’s balancing measures are designed to close.
Why it matters: the plan seeks to maintain the city’s 15% reserve policy going into FY 2627 while addressing recurring and one-time needs. Staff said they will present the fuller budget to the full City Council on May 18, with a planned adoption at the council’s second meeting in June pending feedback.
Key elements of the staff proposal:
- Revenue and reserves: staff reported nearly $2.0 million of favorable revenue performance since the midyear update, primarily from sales tax. Staff said they are reserving the improved general-fund projection instead of using it in the balancing plan.
- Reallocations and internal service funds: staff proposed converting building and fleet maintenance to an internal service fund that reallocates approximately $2.0–$2.5 million in citywide costs and produces a roughly $400,000 general-fund reduction by billing departments for their use of facilities and fleet.
- Targeted augmentations and one-time spending: the FY 2627 proposal includes about $650,000 of baseline augmentations (utilities, staffing needs), plus $4.1 million of one-time allocations from fund balance for liability, capital and other priorities. Staff flagged funding for an interim shelter project at the Bridal site with the city’s share estimated between $500,000 and $750,000 depending on final agreements.
- Fire operations: staff recommended adding one firefighter-paramedic per shift (three positions total) as floaters to reduce overtime and injury-related leave costs; the net budget impact was described as slightly under $100,000 compared with current overtime costs.
- Departmental reductions and personnel savings: staff identified about $800,000 in departmental contract reductions and $400,000 in personnel savings by holding vacancies and reducing temporary hours; departments will be asked to absorb some work within existing staffing.
Staff emphasized contingency planning tied to a library tax on the June ballot and discussed possible November measures for broader unfunded needs. The Director said the city intends a phased transition from a hard hiring freeze to a selective hiring approach if revenue results support that move.
The subcommittee did not take a formal vote on the budget preview; staff will return to the City Council with the recommended FY 2627 budget and any refinements after council feedback.
