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Temecula council adopts $126 million general fund budget and five-year $916 million CIP, moves to pay off pension liability
Summary
The Temecula City Council on June 9 adopted the FY 2026'27 operating budget and five-year capital improvement program, directing one-time funds to eliminate pension liabilities and placing $7.5 million in a pension trust. The measure passed unanimously.
The Temecula City Council on June 9 adopted its FY 2026'27 operating budget and a five-year capital improvement program after a staff presentation and brief council discussion.
Finance director Jennifer Hennessy told the council the general fund's revenues are projected at $126 million for the coming year, with expenditures of about $112 million and sales tax accounting for roughly 38% of revenue. As part of the city's debt-reduction strategy, staff recommended using $9.3 million of available general-fund balance to pay down unfunded pension liabilities and depositing $7.5 million into a pension trust to shield the city from future revaluation risk.
"The general fund serves as the city's primary operating fund and provides the funding required to deliver public safety, public works, community development, and administrative services," Hennessy said. "That concludes my presentation and I'm available for any questions."
Hennessy also presented the five-year capital improvement program, which lists 94 projects with a total estimated cost of $916 million. The city has identified funding sources for $634 million (about 69% of the total); $283 million remains unspecified pending future funding decisions. Anticipated CIP spending in the near term is projected to exceed $192 million.
Councilmembers commended staff for the budget work and noted prior public hearings and a budget workshop had provided detailed review. After discussion, the council voted 5-0 to adopt the operating budget, the capital improvement program and the related policy updates.
The budget documents also include policy changes recommended during the workshop: a tightened debt-service limit for general-fund obligations (reduced from 10% to 5% of general-fund revenue), updates to the city's capital-financing and pension-funding policies, and an explicit requirement that future debt obligations be brought to an accessible public meeting.
The council's action restores the city's reserves to full funding targets and, according to staff projections, will leave an ending general-fund balance of approximately $29.7 million for the next fiscal year. The vote concludes the council's formal adoption of the fiscal plan for FY 2026'27.
