National City faces $8.2 million shortfall; council hears staffing and revenue proposals ahead of June budget adoption

City officials outlined a proposed fiscal 2026 budget that would leave the general fund roughly $8.2 million short, driven by new pension obligation costs, higher liability and workers' compensation premiums, and transfers to a new capital-improvement fund.

Finance Director Bruce told the council the city is “looking at a deficit of 8,200,000 for next fiscal year,” and said rising CalPERS unfunded liability payments and a reclassification of pension obligation bonds into transfers are major drivers. He said property and sales taxes together account for about 79% of general-fund revenue, while the city is projecting lower interest income and reduced successor-agency administrative reimbursements.

City Manager Scott summarized the workshop process and timetable, saying staff would review department requests and follow up with any needed detail so the council could “come back in, the second meeting in June and adopt the budget, if we can.” The council directed staff to return with refined numbers and options for balancing before the statutory July 1 deadline.

Department heads described focused requests and possible offsets. Public Works Director Steve Manganiello urged restoring and right-sizing engineering positions to speed permitting and reduce consultant costs, and proposed shifting some services into enterprise-style funds so fees paid by users, not the general fund, cover those services. In public-works presentations, staff also asked to fund four additional custodians and two sewer-funded positions to address service gaps.

Community Development Director Carlos Aguirre outlined an enterprise approach to city-owned real estate and asked for seed funding to study and advance development options on properties such as Bay Marina and the City Hall campus. Aguirre said the city recently partnered with Community Housing Works on a 145-unit affordable housing project and recommended creating a small strategic-investment/predevelopment fund to leverage future revenue and ground-lease receipts.

Public-safety leaders asked for a mix of operational and cost-recovery changes. Fire Chief Sergio Mora framed new requests as cost-recovery rather than new recurring expenses: he proposed creating a division chief of operations funded by two current vacant firefighter slots, and said the department is studying a ground-emergency medical-transport model and a first-responder fee to recover costs from insurers for pre-hospital care. “Good enough is not good enough,” the chief said of the department’s continuous-improvement goals.

Police leadership cited officer and dispatcher vacancies and requested two community-service officer positions and a facilities building-trades specialist to reduce sworn overtime, along with technology investments such as fleet cameras and a tethered drone that can support major incidents.

Other departments raised narrower but potentially costly items: the library asked for funding to continue a pilot police presence and for a one-time update to its integrated library system; community services described heavy demand for its nutrition program—about 400 meals daily—where county reimbursement covers only part of the per-meal cost; human resources requested authorization to fill a vacant employee-relations manager to handle internal investigations and bargaining support.

Staff stressed implementation choices and trade-offs rather than only cuts. Bruce and the city manager noted that some one-time reserve uses and seed investments (for example, a $250,000 strategic-investment fund discussed by community-development staff) could produce longer-term revenue but would reduce one-time balances this year. The finance team said the Munis ERP conversion has delayed some audit work and consumed staff time, a factor in timing for finalizing numbers.

No final budget votes were taken at the workshop. The council approved a procedural motion to extend the meeting and instructed staff to return with a consolidated list of requests, proposed offsets and ordinance/vote-ready options to allow a budget adoption vote at or before the June 17 council meeting.