Lodi presents balanced FY 2026–27 general fund budget but warns of structural deficits and deferred maintenance risks

City staff presented the proposed FY2026–27 general fund budget to the Lodi City Council on June 3, describing a balanced spending plan for the year that relies on one‑time resources and a set of balancing measures, while warning that longer‑term projections show structural deficits.

Overview and balancing measures: the Internal Services Director/Budget Manager reviewed results from the city’s Balancing Act engagement tool and said the proposed FY27 budget is balanced for adoption on June 17 but includes a programmed use of approximately $3.9 million in available general fund balance to cover negotiated salary and benefit increases. The budget does not add any new general fund positions and relies on multiple one‑time and recurring reductions including lowered vehicle and equipment replacement contributions for police and fire (reduced to straight‑line depreciation) and deferred facility maintenance funding.

Major items and cuts: staff reported that police and fire together account for nearly 60% of general fund expenditures (police ≈ $36.3 million; fire ≈ $21.6 million). To balance the budget, the proposal reduces vehicle replacement and equipment replacement contributions (fire cuts totaling about $1.64 million; police reductions about $668,000) and directs departments to identify roughly $2.8 million in further savings through overtime and operational reductions, deferred equipment purchases and postponed training and capital projects. The proposed capital program for the general fund is limited and includes a $300,000 Civic Center roof repair and smaller, targeted facility projects.

Five‑year outlook and risks: staff’s five‑year forecast models modest revenue growth but shows expenditures outpacing revenues, driving operating deficits that grow from approximately $4.3 million in FY27 to about $5.6 million by FY32. Staff noted an 11.2% year‑over‑year increase in the city’s unfunded pension liability (approximately $1.227 million) and a CalPERS funded ratio improvement to ~71.6% as of April 30, 2026. The forecast excludes certain non‑recurring assets (notably peaker plant rental income) and, absent new revenue or structural changes, projects a need to draw on reserves and the pension stabilization fund in the coming years.

Council questions and next steps: councilmembers asked for more detail on deferred maintenance (staff identified a police department roof replacement estimate of roughly $1.4 million), HVAC and facility replacement timing, Measure L uses for parks and whether peaker plant rental income should be included in longer‑term planning. Staff said they will return with more detailed facility maintenance and street‑funding options and noted the budget must be adopted by June 30 to avoid risk to state and federal funds.