City presents FY2027 midcycle budget amid concerns about reserves and program funding

City staff delivered a comprehensive presentation of the City Administrator’s recommended midcycle operating and capital budget for fiscal year 2027 at the May 19 meeting, outlining departmental updates, internal service fund adjustments, and capital priorities across water, airport, clean energy, waterfront and other enterprise funds.

Budget Manager Natalyia Glusag and budget analysts reviewed the budget calendar and the phased schedule to adoption (budget deliberations June 9; adoption June 16). Staff described a multi-year outlook and emphasized that enterprise/internal funds rely principally on fee-for-service revenue. Highlights included plans for a facility condition assessment to guide capital work on facilities, a vehicle replacement program and a fleet replacement capital increase due to deferred purchases, a proposed 9.5% wastewater and 10% water rate increase (previously approved as part of FY25), and airport efforts to secure FAA grants for terminal improvements (including a $7 million passenger facility charge transfer and pursuit of roughly $37 million in FAA grants for terminal design and construction).

Staff also warned that the city’s general fund remains below reserve policy targets and that the self-insurance fund is underfunded relative to actuarial recommended levels. In response, the council and public asked detailed questions about reserve usages, how enterprise fund transfers interact with the general fund, and contingency planning for waterfront adaptation and dredging costs. Several members asked for additional briefings on the solid-waste fee true-up proposal (Marborg hauler compensation adjustments) before budget adoption.

The presentation included an estimated staffing and implementation plan for the rental-registry phase-in (tied to a separate policy ordinance discussion), and staff said they would phase registry revenue collection to begin before hiring all administrators as a way to reduce near-term budget pressure.

Council members thanked staff for detail and asked for follow-up briefings on specific items, including a more thorough discussion of the clean-community fee true-up, dredging funding sustainability, the energy management fund, and the self-insurance reserve recovery plan. The council did not take final budget votes at this meeting; staff will return for deliberations and adoption in June.