Council reviews balanced preliminary two‑year budget and discusses tourism partner funding

City staff presented a preliminary two‑year general fund budget on May 5 and forecast constrained revenue growth with flat sales and hotel taxes, steady property tax and rising personnel and insurance costs. Administrative Services Director Ran Cornell and City Manager Chris Huot said the proposed budget is balanced for FY 26–27 and 27–28 but warned of limited room for new general fund spending.

Cornell said the city projects roughly $54 million in general fund revenue in the first year and $55 million in the second; staff will maintain the council’s minimum reserve of about 30 percent. He said major revenue drivers—property tax, sales tax and transient occupancy tax—represent about 80 percent of general fund receipts, and both sales tax and hotel tax have flattened since the post‑pandemic surge. "We're projecting a little more than $54,000,000 in general fund revenue in the first year and about 55,000,000 in the second year," Cornell said.

The presentation also reviewed supplemental sales tax (Measure J 2024) projected to fund streets and public safety; staff programmed roughly $24 million of supplemental sales tax for streets across the two years and outlined major capital needs including Creston Road Phase 2, Riverside sidewalks and future projects such as the Linden/Union Road overcrossing that remain largely unfunded in outer years.

Councilmembers discussed the city's annual contributions to tourism and business organizations (Chamber, Main Street, Wine Country Alliance). Staff noted the current combined contribution totals about $317,000; council signaled consensus to keep funding at similar levels for the coming year while directing staff to meet with the organizations for performance review and to report back prior to budget adoption.

Staff will return with additional detail for utility and enterprise fund budgets at the May 19 meeting and with a final budget adoption hearing in June.