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Milpitas council adopts $292.3M FY2026–27 budget, directs $1.66M to structural‑deficit reserve
Summary
The Milpitas City Council approved a $292.3 million all‑funds operating budget for FY2026–27 and directed staff to appropriate an additional $1.66 million from projected FY2025–26 excess revenue into a structural‑surplus appropriation to reduce the forecasted FY2027–28 shortfall. The vote was unanimous.
Milpitas city leaders on June 9 approved a $292.3 million operating budget for fiscal year 2026–27 and added an explicit policy to set aside an additional $1.66 million to address a projected structural deficit in later years.
The council adopted the budget after a lengthy public hearing and discussion of the city’s five‑year forecast. Finance staff told the council the FY2026–27 package includes a $152.1 million general fund, a $33.8 million capital improvement program and staffing at 451 full‑time equivalents. The city’s forecast shows a modest surplus in 2026–27 but widening deficits in subsequent years without further actions.
“This budget reflects our community’s values and priorities,” Council Member Lamb said during the hearing, urging colleagues to review the document carefully before adopting it. Finance staff described a five‑year forecast that has been narrowed but still projects a multi‑year gap driven by long‑term pension and service costs.
The council discussed options to shrink the out‑year shortfall, including one‑time transfers, bond refunding, paying down the city’s unfunded actuarial liability (UAL), and new revenue measures such as a potential business tax. After a staff workshop during a recess, Council Member Chua moved to add a specific action allocating projected FY2025–26 excess revenue to a structural‑surplus appropriation to offset the FY2027–28 shortfall; the motion passed unanimously.
City staff said the additional $1.66 million will be appropriated to a designated structural‑surplus line and reconciled to the fiscal‑year‑end close when audited balances are available. The council also directed the city manager to return with updated policy language for the waterfall of year‑end funds.
Public safety spending remains the largest general fund item, and several council members and public‑safety employees pressed the council to avoid cuts that would reduce core services. Speakers representing city workers and the Milpitas Police Officers Association warned that across‑the‑board cuts would reduce services that residents depend on and urged the council to prioritize staff and service continuity.
What’s next: Staff will finalize the mid‑year accounting and return with any implementing language needed for the new structural‑surplus appropriation; the city intends to monitor forecast updates and report back at mid‑year and in subsequent budget forecasts.
