Manhattan Beach adopts FY 2027 budget after council approves $6M insurance reserve transfer

The Manhattan Beach City Council adopted the fiscal year 2027 operating budget on June 2 after hours of presentations and public comment about the city's finances.

Finance Director Libby Breard told the council the number many residents saw as a $9.5 million deficit is not a structural operating shortfall but reflects a change in how the city reports interfund transfers and a proposed one-time transfer to shore up the insurance reserve. "To be clear, the 9 the 9.5 million that you're hearing about as a deficit is not a structural funding imbalance where ongoing expenditures are exceeding our ongoing revenues," Breard said. "This number includes ... a proposed $6 million one-time transfer to our insurance reserve fund."

That presentation followed a monthslong budget process. Breard said public safety and emergency services account for roughly 52% of general- fund spending and that Measure MMB (a transactions-and-use tax approved by voters last November) is generating about $6.6 million annually for the city. She also described a change recommended by the city's external auditors: bringing interfund transfers onto the revenues/expenditures page. Breard said two audit firms recommended the change because it gives a clearer picture of how transfers affect the year-end fund balance.

A number of residents said their concern was not accounting technicalities but programmatic impacts and staffing. Longtime resident Fred Taylor urged the council to consider hiring freezes and a task force to examine spending, saying, "We're watching a runaway financial train and my opinion is that it's driven by the city staff and not driven by the council." Council members said they heard the public and pressed staff for options.

Council members responded by directing staff to adopt low- and medium-impact reductions that staff identified and to ask the finance subcommittee to pursue additional options for longer-term savings and revenue enhancements. Among the measures presented were passing through credit-card convenience fees (staff estimated roughly $350,000), increasing some parking citation fines (an estimated $300,000 at modest increases), pursuing a business-license ballot measure (polling planned), and re-evaluating short-term rental collection and fee-waiver policies.

Council also debated and voted on three proposed new or converted positions included in the proposed budget. After separate votes on upgrades and new additions, the council approved two reclassifications and approved the human-resources assistant, a public-works management analyst (position cost shared across funds), and a sewer maintenance worker (an enterprise-funded role). Several council members said they preferred waiting until midyear for any new hires; others argued the positions would reduce longer-term costs and improve service delivery.

Breard emphasized that many large-dollar pressures, including rising CalPERS unfunded liability payments and insurance-claims costs, have been developing for years. She described the insurance reserve as underfunded and said the administration recommended a one-time transfer now to avoid repeated midyear requests for appropriations.

After deliberations, the council adopted the budget and the related GANN appropriations-limit resolution. The council's vote to adopt the budget was recorded as approved by the full five-member panel.

What happens next: Staff will post final budget documents and prepare midyear updates that will report actual revenues and expenditures; the finance subcommittee will continue work on longer-term cost and revenue strategies.