Santa Maria officials present preliminary two‑year budget showing structural gap; staff warns LEAF reserves near depletion

Rebecca Campbell, the city’s finance director, told the Santa Maria City Council on June 2 that the proposed biennial budget for fiscal years 2026–28 carries a persistent structural imbalance and relies on one‑time reserves to balance the first year.

The presentation outlined operating revenues of about $284.4 million in fiscal year 2026–27 across all funds and noted enterprise funds make up almost 48% of total revenue. Campbell said the general fund faces ongoing expenditures exceeding revenues by about $7.3 million in FY26‑27 and $7.9 million in FY27‑28; staff is proposing a $7.3 million transfer from the Local Economic Augmentation Fund (LEAF) to close the first‑year gap, which auditors warned would leave LEAF with less than $1 million if fully used.

Why it matters: Using one‑time reserves to balance ongoing costs reduces the city’s financial flexibility and increases pressure to identify sustainable revenue or further reductions. Campbell told council that previous vacancy eliminations already removed a layer of budget flexibility and that most remaining options affect personnel and service levels.

Key details from the presentation included a reduction of full‑time equivalent positions from 741.6 to about 703.8 (no layoffs anticipated), $158.3 million in capital appropriations across roughly 52 projects, and a net increase to general fund costs of about $1.3 million in FY26‑27 tied largely to new software and one‑time consulting costs. She said personnel costs total roughly $134.5 million for FY26‑27 and that police and fire together represent nearly half of that amount.

Council members pressed staff on deferred maintenance, an ADA transition plan, and risks tied to aging systems in critical facilities. Campbell said the city has commissioned a facility condition assessment and has recruited a vendor to update the ADA transition plan, budgeted at roughly $240,000, which will identify priorities for future capital projects. She also told the council auditors had found an overstatement in prior reserve transfers that reduced previously projected LEAF balances.

Public input preceding the presentation included labor concerns. Nicole Bryant, representing SEIU Local 620, criticized a bargaining direction reportedly asking SEIU members to accept a 5% wage reduction and up to a 20% cut in medical contributions while police and fire receive cost‑of‑living and equity adjustments and retain employer‑paid medical. Bryant said the proposed SEIU cuts would save the city an estimated $1,573,000 across funds and contrasted that with roughly $1,280,000 in new general‑fund and Measure U supplemental spending requests appearing in the budget packet.

What comes next: Council received the budget for review and directed staff to return on June 16 with a recommended final budget. Several council members asked staff to pursue further analysis of deferred maintenance liabilities, capital priorities, and potential fee adjustments; staff indicated limited remaining “wiggle room” beyond the vacancy and service‑level reductions already proposed.

Ending: The council did not adopt a final budget on June 2; members scheduled additional committee meetings and said they would act on the biennial budget at the June 16 meeting.