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La Habra Heights council keeps $4 million reserve, reviews preliminary FY 2026–27 budget
Summary
The council voted to retain a $4 million general fund reserve and reviewed the preliminary FY 2026–27 operating budget, which staff said projects $5.56 million in revenues, $5.5 million in general‑fund expenditures and a $42,000 surplus; the full budget will return for formal adoption in June.
La Habra Heights City Council voted May 18 to maintain a $4 million general fund reserve and spent the remainder of the meeting reviewing the preliminary FY 2026–27 operating budget.
Assistant City Manager delivered the annual reserve review and the second study‑session on the upcoming budget, telling the council that "the general fund balance is projected to be approximately 6.44 million, or more than 115% of our annual expenditures," and that $4 million of that amount has been designated to the reserve policy to address economic uncertainty and emergencies.
The report said revenues for the general fund rose to about $5.56 million, driven by higher permit and development fees and stronger investment earnings, while estimated general fund expenditures declined to roughly $5.5 million. Capital improvement estimates were reduced from $2.8 million to about $2.3 million after staff revisited street‑project cost assumptions. Staff presented a preliminary across‑fund total of roughly $10.4 million and a projected surplus of about $42,000.
Council discussion focused on whether to adjust the $4 million threshold. Several members said they were comfortable keeping the policy at that level to provide a safety net; a motion to approve the reserve policy passed with recorded votes in favor by Carol Engelhart, Norm (recorded by roll call), Greg Steppler and Brian Bergman. John Pespiza was recorded as excused.
Members also pressed staff on line items in the budget, including a recalculated transfer into the fire fund (reported as $669,418) and a small increase in transfers supporting law enforcement (raised to $170,000). Staff said two staffing changes are included in the draft budget: a budgeted accountant position (replacing a previous role) and a proposal to convert a part‑time position (Josh) to full‑time.
The meeting included discussion of capital priorities for vehicles and street work. Staff noted that Senator Archeletta had helped secure funding for a type‑1 fire engine and said the senator was reviewing cost breakdowns for a proposed brush patrol or command vehicle. Council members asked staff and the roads committee to analyze whether combining multiple street projects into a single contract would yield savings and whether the city has sufficient cash flow to "float" a larger consolidated project.
The budget as presented remains a study document; the council and staff agreed the draft would return for formal consideration at the June meeting, when final adoption is expected.
