Council adopts mid‑cycle FY26–27 budget; directs review of select projects amid debate over returned loan funds

Irvine — The City Council adopted a mid‑cycle appropriations budget for fiscal year 2026–27 on June 23 after receiving a staff presentation that projected a general fund shortfall if no adjustments were made.

Finance staff told the council the mid‑cycle review shows an anticipated general‑fund deficit of about $9.1 million for FY26–27 without further action. Staff recommended balancing the budget through a combination of expenditure reductions (including holding non‑emergency vacant positions and delaying selected vehicle replacements) and modest revenue adjustments. “If no adjustments are made, the fiscal year 26 27 general fund faces a deficit of $9,100,000,” Deputy Director Jonathan Nee said during the presentation.

Council also considered a staff request to extend for one year a pilot bus program serving University High School at an estimated cost of $218,552. After debate about whether the Irvine Unified School District could share costs, the council approved staff’s recommendations and included the bus funding in the adopted budget.

A lengthy exchange followed about how to treat repayments from the Orange County Power Authority (OCPA). Several council members argued the repaid principal and interest should be returned to the asset management plan (AMP) fund rather than spent on new projects; others said the council previously directed that the repayments be earmarked for sustainability and mobility projects. The council agreed to continue those broader policy discussions during a special budget meeting set for August 3 and adopted the budget by a 7–0 vote.

Separately, the council considered citizen and council requests for independent reviews of a set of prior projects (including COVID‑era spending, 2022 severance packages, the Swift Cities gondola demo, the library system transition and other items). Staff presented four review levels with time/cost estimates ranging from internal compilation (Level 1) to a full forensic investigation (Level 4). After public comment and council discussion, the council approved a substitute motion, 4–3, directing staff to perform Level‑1 compilations (staff‑led document assembly and summaries) on a narrowed set of items and to return with scoped cost proposals for any deeper Level‑2 or Level‑3 reviews (timing to be returned within 60 days of the August 3 special budget meeting).

Outcome and next steps: Council adopted the FY26–27 appropriations resolution and directed staff to implement the budget balancing measures and return with implementation details; staff will compile Level‑1 reviews of targeted projects and propose scoped costs for additional reviews ahead of the August 3 deep‑dive.