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Sacramento officials present FY27 Measure U plan to close $66.2 million gap with cuts, shifts and limited restorations
Summary
City staff presented a FY27 proposed budget that uses program reductions, contract renegotiations and one-time funding to close a $66.2 million shortfall; Measure U would see revenue gains but program and staffing cuts, while council-directed restorations and homelessness funding uncertainty complicate next steps.
City budget staff presented the proposed fiscal year 2027 Measure U and general fund budgets to the Measure U Community Advisory Committee on May 18, outlining a $66.2 million mid‑year deficit and a package of reductions and balancing strategies intended to produce a roughly balanced FY27 proposal.
“My name is Martha. I am the budget manager,” the budget manager said in opening the presentation, noting “the fiscal year 27 proposed budget for all funds is about $1.7 billion.” Staff said the mid‑year forecast began with a $66.2 million shortfall that, together with labor contract adjustments and a set of balancing strategies, produces a near‑balanced FY27 budget.
Brian Martin, a principal budget analyst, walked commissioners through program‑level changes. “For FY27, our total funding going to homeless services is 39.4 million,” he said, and added that state encampment relief funds have been masking part of the city’s burden; staff projects those state funds will phase out, shifting greater costs to the city in future years. Martin also listed specific Measure U reductions, including reduced funding for the Street Navigation Center given a potential Caltrans lease expiration, a shift of the City Motel program toward a voucher model, one‑time reductions to gang prevention projects, shorter neighborhood pool operating schedules and deletions of 12 positions in the police hiring pipeline.
Staff described the mechanics of closing the gap: about $68.8 million in balancing strategies composed of investment earnings, debt refinancing savings, contract renegotiations with homelessness vendors and department revenue or cost‑shift changes. The city also identified roughly $11.3 million in labor contract cost adjustments included in the proposed plan.
Staff projected Measure U‑funded positions would fall: “a total of 91.7 FTE Measure U positions are eliminated,” Martin said, with 54.6 FTE vacant and 37.1 filled as of early April; he estimated about 34 people may be bumped or separated. The lion’s share of reductions by program area were in community response and youth programs, with notable staffing impacts in parks and Gypsy (park maintenance) roles.
Staff also flagged limited augmentations in Measure U—about $800,000—largely for one‑time community response items and new administrative positions, including a Language Access Coordinator. Martin said attachment lists in the staff packet provide line‑by‑line detail of reductions and augmentations.
Council restorations complicate the picture. Staff told the commission that City Council had passed a motion to restore roughly $1.8 million in services, including violence prevention grants and recreational swim hours, and directed staff to identify funding sources and present a plan on May 19. The budget team said financing options under consideration include park maintenance savings from contractual arrangements, freezing some stipends and one‑time departmental savings and using economic uncertainty reserve adjustments.
The proposed five‑year forecast shows the FY27 shortfall narrowing to about $35.4 million in FY28 because some strategies are one‑time rather than ongoing; the forecast rises again in later years. Staff emphasized large long‑term liabilities—about $1.5 billion in unfunded pension obligations, roughly $200 million in OPEB liabilities and about $2 billion in deferred capital needs—that will continue to shape budget choices.
Next steps: staff said the Council will hear the budget the following day, May 19 at 5 p.m., with adoption scheduled for June 9 at 5 p.m. The commission and staff will continue to refine funding sources for Council‑directed restorations and return with details.
The session included one public commenter who criticized staff and alleged procedural problems; commissioners pressed staff for more detail on state homelessness funding, the Street Navigation Center lease, the hotel/voucher program realignment and the expected quality and scope of contracted services versus in‑house staffing.
The commission did not take a formal action at the meeting; the budget process proceeds to the City Council hearings.
