Chino Hills managers warn of a $4.3 million general-fund shortfall and shrinking reserves in FY 2026–27

City Manager Rod presented the proposed FY 2026–27 operating budget to the Chino Hills City Council, saying the plan protects public safety, parks and open space while laying out a multiyear funding challenge.

"Our projection is a snapshot of our total city revenues at a 158,000,000. Our total city expenditures at 159.7," Rod said, adding that "that leaves us to the deficit of 4,300,000 in general fund." He told the council the city can cover the shortfall in 2026–27 using reserves but warned that continuing the pattern is "unsustainable" in the long term.

Why it matters: the city relies heavily on a vehicle-license-fee revenue exchange that flows through the property-tax component and said staff estimates that Chino Hills receives approximately 4¢ of every property tax dollar collected in the city — one of the lowest shares in California. Rod and staff said that local revenues are constrained by those allocations and that larger revenue changes would require state-level action.

Staff proposed no immediate service cuts but flagged potential options if new revenue isn’t found, including trimming discretionary community services or long-term staffing reductions. Rod said the city is using conservative forecasting assumptions (about 2 percent growth) and that unrestricted reserves were projected at roughly $25.4 million at the end of FY 2026–27 but could be exhausted around FY 2030–31 under current trends.

Public-works projects and cost savings: Public Works Director Daniel Bobadie outlined an $11.3 million capital-improvement program that includes 18 projects. Daniel highlighted a $2.5 million Pipeline Avenue sewer-main upsizing, a $1.1 million Grand Avenue West entry landscaping project, and street and traffic investments. Daniel also described past and ongoing cost-saving measures — LED streetlight retrofits (about $400,000 annual savings), recycled-water installations (about $1.2 million savings), and turf replacements (about $91,000 savings).

Law-enforcement costs were a major driver of the structural gap. Rod and staff told the council that rising sheriff contract costs and county-level liability increases added roughly $1.7 million to $2.1 million in recent budget years.

Budget controls and next steps: Finance Director Krista Baharja proposed two administrative updates to the budget resolution: giving the finance director authority for intra-fund appropriation transfers for smaller items (staff discussed a $25,000 threshold, with council and city manager later referencing higher internal thresholds for efficiency) and requiring Planning Commission review for any newly added CIP project over $1,000,000 to confirm General Plan consistency.

Councilmembers asked for additional outreach and clearer talking points for residents; staff said outreach materials and a public education push are in progress. Rod closed by saying the city will need to secure new revenue sources or consider service reductions if the structural deficit continues.

What’s next: staff will finalize the proposed budget documents and bring required resolutions back to council for adoption in upcoming hearings and formal budget sessions.