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Costa Mesa adopts balanced $245.9 million budget after debate over police overtime and vacancies
Summary
The City Council adopted a structurally balanced FY 2026–27 budget that funds public safety and capital needs while drawing criticism from two members over overtime and vacancy assumptions; council approved final resolutions 5–2 and directed quarterly budget reporting.
The Costa Mesa City Council on June 2 adopted a $245.9 million citywide spending plan for fiscal year 2026–27 after extended debate about police overtime, vacancy savings and one‑time funding. The council approved the set of resolutions and the operating and capital budget by a 5–2 vote; Council Members Arlos Reynolds and Andrea Mar voted no.
City Manager Gallardo Daly presented the proposed budget as a “structurally balanced budget” that does not use general fund reserves and fully funds the city’s ordinance‑required deposits to the capital asset needs (CAN) and IT needs funds. She said the package reflects “careful balancing of revenues and expenditures” while prioritizing public safety and infrastructure projects.
The budget package includes about $200 million in general fund resources, roughly $23.6 million for capital projects, and an anticipated $12 million certificate of participation to renovate Fire Station 2. Finance staff projected modest revenue growth (about 3% overall) driven by sales and property tax projections, and estimated transient occupancy tax (TOT) up about 5% year over year.
The most contested issue in deliberations was overtime funding for public safety. The police department’s leadership told council that historical overtime levels for a fully staffed department average about $4 million annually. The council and finance staff responded that the proposed budget sets the police overtime line at about $1.9 million and relies on a 2% citywide attrition factor and departmental cost‑containment measures to manage costs.
Police leadership warned those reductions pose risk. As the deputy police chief put it during council questioning, “If you look historically at the police department, about $4 million is a range.” City staff said the FY 26–27 budget is built on updated revenue projections and assumed vacancy, salary‑savings and other one‑time adjustments; they committed to regular monitoring and to return to the council if trends require additional action.
Council members pressed staff on the use of one‑time funds to cover recurring costs. The city used interest earnings on previously allocated ARPA funds to fully fund an arts specialist position and used opioid settlement proceeds to reduce the general fund contribution to housing authority/shelter operations for the coming year. City Manager Gallardo Daly said those are short‑term steps and acknowledged the need to identify sustainable revenue or adjust services in future budgets.
The adopted budget also includes funding for parks and transportation projects, a continuation of the city’s capital alley program, playground replacements, and repair work across city facilities. Council asked for quarterly updates and a mid‑year budget review to track revenue, overtime and vacancy trends.
The council adopted the budget and related resolutions as presented. The meeting record shows motions to adopt were approved 5–2; staff said they will provide more frequent briefing material so the council can assess whether mid‑year adjustments are needed.
