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Milpitas staff present FY2026–27 operating budget proposals and vacancy report; forecast shows longer‑term structural gap
Summary
Finance staff told the council May 5 that recurring savings have narrowed Milpitas’s multi‑year structural deficit but a gap reappears by FY2027–28; HR reported a citywide vacancy rate of about 11.1% and one bargaining unit (MEA) above 20% triggers an AB2561 disclosure.
City finance and human resources officials presented the proposed FY2026–27 operating budget proposals and the annual AB2561 vacancy report at the May 5 Milpitas City Council meeting.
Finance overview: The finance team presented a five‑year general fund forecast showing a balanced FY2026–27 base year but a structural deficit reemerging by FY2027–28 and growing in later years under current assumptions. Staff said previously adopted recurring savings (about $2.5 million in FY2025–26 recurring reductions) have delayed the deficit but that continuing choices will be needed to close long‑term gaps. The presentation highlighted that roughly 80% of general‑fund spending is salaries and benefits, and that structural balance requires recurring savings or revenue increases.
Vacancy report: Human Resources Director Kelly Parmley reported 50 vacancies across 451 authorized FTEs — about an 11.1% vacancy rate as of March 31. More than half the vacancies were in active recruitment; however, the MEA bargaining unit exceeded the 20% threshold (reported around 21.1%), triggering additional AB2561 requirements. Parmley and staff said the city has used a strategic exception process to review recruitments and that some positions were held pending job‑spec updates to improve hiring outcomes.
Budget proposals and one‑time items: Budget staff summarized 11 operating proposals totaling $2.39 million, with $2.25M (94%) funded from non‑general funds (equipment maintenance, water/sewer funds and restricted sources). The net general‑fund impact was presented as $0 after offsets. Notable items discussed included one‑time fleet and police vehicle replacements paid from the equipment fund, a small law‑clerk internship for the city attorney’s office, technology investments and reclassifications in purchasing and asset management intended to produce operational efficiencies.
Council priorities and pilot programs: Council members discussed several near‑term pilot or one‑time requests to bring back at budget adoption — a Ring doorbell camera subsidy program for residents (police initiative), an expansion of a youth jobs program, a one‑year pilot for a mental‑health navigation service (Care Solace) estimated at $45–55K for a pilot year, and continued funding needs for Milpitas Smart transit (staff reported contract costs roughly $90–110K per month and that current grant funding runs through spring 2027).
Next steps: Staff will return with procurement and budget implementation details and bring final budget adoption to council on June 2. Council members asked for further info memos on vacancy trends and on cost/benefit for items such as internship positions, grant consulting arrangements and the ring‑camera initiative.
