El Segundo council adopts $189.3 million budget; members warn of a looming deficit and press for overtime review

The El Segundo City Council on June 2 adopted the city's FY2026 operating and capital budget, setting all-funds revenues at $189.3 million and general fund revenues at $110.2 million.

City Chief Financial Officer Paul Chun, who led the presentation, said the plan is balanced for next year and highlighted several changes since the council's May study session, including a $2 million transfer from the economic uncertainty fund into the general fund, an increase in capital projects to about $3.88 million and a $1 million rise in the city's unfunded liability to $3.9 million. "We are happy to present a balanced budget," Chun said, outlining a forecast that showed a potential structural deficit in later years if revenues remain flat while expenditures continue to rise.

The council debated several budget elements before the vote. Staff described two options for a proposed legislative and community affairs function: convert an existing vacant senior management analyst position at an estimated total cost of about $167,000, or hire a part-time consultant on retainer for about $120,000. The administration said that staff would return with more detail if the council wanted to add a recurring position.

Members also pressed for a detailed review of overtime practices in public safety and a telephone/communications analysis; staff told the finance committee they would perform a five-year overtime deep dive and return with findings. The administration noted that some overtime is reimbursable and that timing of reimbursements can affect net costs.

Council members expressed differing views on near-term changes. Some urged caution about creating new recurring staff positions without more information; others said they wanted to avoid cutting critical operational funding while the committee conducts its review. A motion to reopen and reconsider the adopted budget to remove or hold overtime funding failed on a tied vote, leaving the adopted budget in place.

The council approved the resolution adopting the FY2026-27 operating and capital improvement budgets and the appropriations limit on a 3-1 recorded voice vote. The administration will return to the finance committee and council with further analyses on overtime, communications costs and the proposed legislative/community-affairs options.

The council also adopted a separate side agreement clarifying holiday-pay calculations for the El Segundo Police Officers Association so that certain CalPERS pension calculations include those holiday-pay amounts.