Monterey adopts FY2026‑27 budget that balances year with one‑time funds, freezes vacant positions and launches a 'roadmap to resilience'

The Monterey City Council adopted its FY2026‑27 operating budget on June 16 after an intensive, multi‑hour review of finances, staffing and long‑term fiscal stability. The balanced budget for the coming year relies heavily on one‑time measures and staffing deferrals while launching a broader, multiyear effort to eliminate a structural deficit.

City Manager Dante Hall framed the proposal as a short‑term package that produces a balanced FY27 while acknowledging it does not solve the underlying structural shortfall. "We are prepared to present to the city council tonight a budget that balances the next fiscal year, but it doesn't solve the problem," Dante said, urging council and the public to treat the plan as a bridge while staff pursues longer‑term changes.

Key elements of the adopted plan:

- Position control changes: The budget freezes or defunds roughly 29–30 vacant full‑time equivalent positions across departments, producing roughly $3.7 million in immediate general‑fund savings. The finance team also projects additional salary and recruitment timing savings that contribute to closing the year‑one gap.

- One‑time funding: Council accepted staff’s recommendation to use approximately $3.5 million of one‑time Neighborhood and Community Improvement Program (NCIP) funds and other temporary savings to close FY27’s gap while avoiding sweeping permanent cuts immediately.

- Operational reductions: Departments were asked to reduce operating expenses. Staff reported roughly a 17% reduction in some program budgets across the past two fiscal years, but acknowledged that personnel costs remain the single largest long‑term driver of expenditure growth.

- Roadmap to resilience: Council directed staff to begin a structured, transparent process — described by staff as a "roadmap to resilience" — to pursue sustainable, multi‑year structural fixes. Staff outlined five navigation points: shared public understanding of the deficit, prioritization of core services, organizational efficiency improvements, revenue optimization (including consideration of potential ballot measures such as renewal of Measure S), and expanded public engagement.

Major concerns during council debate included the impact of freezing positions on public safety overtime and service levels, rental assistance funding levels, the status of the cemetery and enterprise funds showing deficits, and the potential reputational or practical consequences of returning grant funds if projects are delayed. Fire and police leaders warned that shifting vacancies on paper does not eliminate workload and can increase overtime pressures if staff must act in multiple roles.

Council action and next steps: The council adopted the FY2026‑27 budget (vote unanimous), approved the position control list and salary schedules, and asked for a multi‑month community engagement program that will inform decisions on permanent structural changes. Staff emphasized the difference between one‑time fixes and long‑term solutions and committed to returning with more detailed options during the roadmap process.

Why it matters: The package buys the city time but requires further decisions on revenue measures, organizational change, and service‑level tradeoffs. Council members signaled they expect staff to return with transparent options and clear impacts so the community can weigh potential choices in the months ahead.