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Carmel releases FY 2026–27 recommended budget emphasizing deferred‑maintenance funding and tighter operating discipline
Summary
City staff presented a recommended $41.3 million spending plan (with $39.1 million in projected revenues) that trims operating costs to preserve an $8.5 million CIP intended to address $100 million in deferred maintenance. Staff proposed using up to $2.2 million of fund balance and scheduled a May 12 deep dive workshop.
City staff presented the recommended fiscal 2026–27 budget on May 5, describing a strategy that combines operating‑cost reductions and targeted capital spending to begin addressing an estimated $100 million deferred‑maintenance backlog.
The recommended budget projects $39.1 million in revenues (property tax $9.7M, sales tax $11.2M, transient occupancy tax $9.7M and other revenues $8.5M) and proposes $41.3 million in expenditures. The gap would be filled in part by a planned use of up to $2.2 million of prior fund balance. Staff said the budget meets current policy guidelines for operating‑to‑revenue ratios after substantial operating cuts that reduce projected operating consumption to about 84% of revenue (policy maximum 90%). The first year of the CIP is presented at $8.5 million, with plans to expand to $9–12M in following years to begin targeted repairs to beaches, staircases, sewer outfalls and other critical infrastructure.
Finance staff said the presentation and the book include conservative revenue assumptions and requested council questions to be submitted for a May 12 budget workshop that will review details of operating cuts, CIP carryovers and fund‑balance policy options. Council members asked for line‑by‑line clarifications, the size and composition of the carryover CIP list, and more granular descriptions of operating budget reductions (for example, the proposed reductions to tree programs, landscaping, climate initiatives and contract trims). Staff agreed to provide those details and asked the public and council to submit questions to a dedicated budget email for the May 12 workshop.
Several residents and stakeholders asked that certain new or one‑time revenues—most notably an expected net increase from ambulance charges—be earmarked for capital spending rather than general operations. Staff also discussed the Section 115 pension trust balance and options for smoothing CalPERS pension costs; council members asked for analysis of trade‑offs between using invested reserves to reduce pension liabilities versus retaining funds for capital projects.
The recommended budget will be revised after the May 12 workshop and returned to council for final adoption in June.
