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San Fernando council reviews balanced FY2026-27 budget with limited discretionary funds
Summary
City staff presented a proposed FY2026-27 budget that projects $29.98 million in general fund revenue, $29.90 million in expenditures and a $75,600 surplus; staff recommended modest enhancements totaling $436,600 while warning rising insurance and contracted fire costs constrain new spending.
City Manager Keith and Finance lead Erica Milton presented the city manager's proposed FY2026-27 budget during a special study session, telling the City Council that the plan keeps core services intact amid increasing cost pressures.
Milton said the proposed budget relies on $29,980,000 in general fund revenue against $29,900,000 in expenditures for a modest projected surplus of $75,600. She outlined the city's five major revenue categories, noting property taxes are projected at about $5,000,000 (roughly 16% of general fund revenues) and sales/transaction-use taxes are a crucial but modest share of local receipts.
The presentation emphasized that roughly 95% of annual spending is in fixed costs—personnel, contractual services and internal service charges—and that 146 full-time equivalent positions are budgeted with no proposed staffing increases. Milton told the council the city is budgeting $18,600,000 for personnel (about 62% of general fund spending) and $6,300,000 for contractual services; she called out a jump in liability insurance and LA Fire Department contract costs as the two largest drivers of the constrained outlook.
Why it matters: the administration framed its work as preserving essential services while stepping carefully through limited discretionary resources. Milton offered a short list of recommended enhancements (total $436,600): IT server leasing, codifying the new zoning code online, police tuition reimbursement, council technology replacement and a $25,000 professional contract for financial forecasting. Those items were presented as prioritized uses, not final council approvals.
Council members pressed staff for detail on several items: the estimated cost of a new on-premises server versus leasing (Milton said new servers can exceed $200,000, so staff recommend a short-term lease while pursuing grants), the timing of expected grant awards (staff said 3'4 months for a key IT grant), and the implications of tapping reserves. Staff noted projected reserves of about $10.9 million and reiterated policy guidance that reserve draws should be limited to high-priority capital or emergency needs; a recent facility assessment estimated about $11 million in deferred facility work, reinforcing the caution against routine reserve spending.
The council did not take a formal budget vote during the study session; staff said they will return with additional departmental detail, CIP material and a schedule for upcoming budget hearings on May 26, June 8 and June 15. The city's capital improvement program totals $48,600,000 in project funding for roads, water and sewer improvements for the coming year.
What's next: staff will provide follow-up information requested by council (grant application amounts, server cost estimates, and facility-phase recommendations) and bring the full budget to the council later in the public adoption schedule.
Quote: Erica Milton, presenting the overview, summarized the fiscal trade-offs: "We have a total revenue projected of 29,980,000, total expenditures of 29,900,000, with a projected surplus of 75,600," and asked the council to prioritize maintaining core services in the face of rising fixed costs.
Ending: Staff emphasized that although the general fund is currently balanced, the narrow cushion and recent increases in insurance and fire contract costs limit the city's ability to add recurring new programs without offsetting reductions or reserve draws.
