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South Pasadena proposes $45.7 million budget with reserves and cuts to protect services
Summary
City staff presented a balanced FY 2026–27 general fund budget of $45.7 million that preserves services while using one-time transfers and targeted cuts and fee adjustments to shore up reserves and cover rising costs.
Assistant City Manager Nick Kimell presented the City of South Pasadena’s proposed fiscal year 2026–27 general fund budget, saying it is balanced at $45.7 million while recognizing persistent cost pressures.
Kimell said departments identified a mix of reductions and revenue adjustments that together closed the gap without cutting core service levels. "Through this close scrutiny, we were able to reduce the base operating budget by more than $700,000," Kimell said, and staff also adjusted cost allocations and user fees to shift and recover additional revenue.
The proposed plan includes approximately $3.2 million in one-time reserve transfers to resolve negative fund balances and support underfunded obligations, bringing total expenditures after transfers to about $48.9 million and leaving an estimated $14.3 million in unassigned reserves (roughly 31% of operating expenditures), Kimell said.
Kimell identified three major cost pressures driving budget choices: recently ratified employee compensation adjustments, a substantial increase in internal service charges (liability, workers’ compensation, facility maintenance and fleet), and deteriorating streets, sidewalks and underground infrastructure.
To respond, staff employed four principal steps: close scrutiny of operating line items, an updated cost-allocation plan and overhead study (completed with consultant Will Dan), increased user-fee and penalty recovery, and a final 7% reduction to remaining operating budgets. Kimell said the overhead work reallocated roughly $800,000 to non-general funds and that fee adjustments produced about $750,000 in additional revenue.
The budget directs resources toward four focus areas: bolstering reserves for insurance, vehicles and deferred facility maintenance; launching a customer success center to centralize resident requests; preparing for development impacts with updated impact fees; and addressing streets and sidewalks through targeted capital investments.
No council decision or formal direction to place measures on the ballot was made during the presentation. Kimell closed by pointing residents to the full budget documents and an FAQ posted on the city’s website and invited public feedback.
