Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Budget topic
No spam. Unsubscribe anytime.
Pacific Grove adopts FY 2026–27 budget update; council warned of multi-year deficits
Summary
Council adopted a FY 2026–27 budget update after staff reported a $34.44 million revenue estimate and $36.0 million in general fund expenditures, leaving an operating shortfall of about $1.6 million. Staff said reserves meet a 25% policy through FY 27/28 but projected deficits could reduce reserves thereafter without corrective action.
City finance staff presented an updated two-year budget for fiscal year 2026–27 at the June 17 council meeting and council approved the staff recommendations to adopt the midcycle update and related resolutions.
Key numbers presented by Assistant Finance Director Jessica and staff: • General fund revenues: about $34.44 million. • General fund expenditures: about $36.0 million. • Operating deficit for FY 2026–27: roughly $1.6 million (an improvement from a previously projected $2.6 million shortfall). • Capital program two-year projection: approximately $17 million, with about $11 million (66%) tied to sewer and stormwater work (one-time project timing drove higher enterprise fund expenditures). • Revenue composition highlighted: property taxes about $11.6 million (34%), transient occupancy/hotel taxes about $7.6 million (22%), sales and use tax about $6.0 million (18%).
Staff noted that the city’s five-year forecast continues to show operating deficits in future years and that the adopted reserve policy target was set at 25% (reduced from 35% last year while allocating $1 million each to pension and capital reserves). City leaders flagged that infrastructure needs (an estimated multi‑million-dollar deferred capital backlog noted in staff remarks) and pension liabilities remain additional fiscal pressures beyond the operating picture.
Council discussed revenue assumptions (including property-tax and transient occupancy tax projections), the potential effect of outside development projects (ATC hotel uncertainty) and the need to begin more focused fiscal-sustainability planning beginning July 15. The council voted unanimously to receive the report, approve continued operations under the current fiscal year 2025–26 budget and introduce/hold first readings as needed to adopt the FY 2026–27 update.
Outcome and next steps: Council received and approved staff’s proposed midcycle budget actions. Staff will continue negotiations with bargaining units, refine forecasts, and present a fiscal sustainability work plan at the July meeting as previewed by the city manager.
