Paramount staff outline FY2026–27 budget with small near‑term gap and warnings of long‑term shortfalls

City staff presented the proposed FY2026–27 spending plan to the City Council May 19, framing the budget as balanced for adoption with use of one‑time transfers while warning of structural pressures that will require deliberate actions before the coming fiscal years.

Finance Director Lana Deetsch said the budget projects $48.8 million in operating revenue and $49.3 million in operating expenditures for the general fund, and that staff proposes limited one‑time draws from reserves to end the year with a modest cushion. “This net that bridal us to a net deficit of closer to half a millions,” the director said, and staff noted that without ongoing revenue enhancements the forecast shows a growing gap over time.

Staff highlighted the water fund as a near‑term pressure point: historical loans from the general fund and ongoing operational shortfalls have left the water fund dipping into reserves, and the city plans to bring back a rate study this year to pursue full cost recovery. Deetsch told the council, “For fiscal year 26/27 we are expecting to close the fiscal year with $1,700,000 deficits” in the water fund, and noted additional loans were projected if rates are not adjusted.

The budget presentation outlined department‑level allocations and proposed program changes: community services programs, public safety contract costs (LASD), downtown and capital projects funded through a mix of grants and local funds, and proposed equipment and facility investments. Staff also identified potential reductions to some business support initiatives, including pausing the business security rebate, which has drawn roughly $20,000 of $60,000 available in the current year. The administration flagged a potential parcel tax as a long‑term revenue option; staff said that if council directs it, the measure could go to voters and materially change long‑term projections.

Council members asked detailed questions about assumptions (sales tax, gas price effects), reserves, and the timing and feasibility of rate adjustments for water. Staff emphasized next steps: respond to council direction at the June 9 meeting and bring back the final proposed budget for adoption, plus a water rate study and follow‑up on the parcel‑tax conversation if the council desires to pursue that path.

The presentation covered numerous capital projects and carryover work (alleys, medians, bus shelters, park improvements), program carryover and grant‑funded items, and continuing investments in public safety technology and homeless services. Staff said the proposed budget maintains a disciplined approach to cost control while preserving core services, but repeatedly warned that long‑term structural imbalances will require policy actions beyond one‑time transfers.

The council took the presentation under consideration and directed staff to return with a final proposed budget and any revisions at the June 9 meeting.