Montclair council adopts FY 2026–27 budget after workshop; freezes vacant positions to cover shortfall

The Montclair City Council adopted the City's fiscal year 2026–27 operating budget and the Montclair Housing Corporation budget on the consent calendar following a special workshop on June 2. Presenter staff outlined a $631,544 general-fund shortfall and recommended balancing the budget with a transfer from unassigned reserves plus $3.9 million in department reductions.

Presenter/Finance staff summarized the proposed operating budget and said the city faces a projected general-fund deficiency of "a net deficiency of general fund revenues over general fund appropriations in the amount of $631,544." The presentation listed major revenue components — including Measure L transaction/use receipts, Bradley-Burns sales tax receipts, and property tax — and noted the general-fund unassigned reserve would be well below the council's 25% target under the current projections.

City Manager Ed said the manager's recommended budget reduced department requests from $64.5 million to $60.6 million across all funds and froze vacant positions to limit the shortfall. "We also froze a number of positions that saved the budget about ... just over $1,000,000," Ed said, adding that without those actions the deficit would have grown to roughly $1.67 million.

Council members pressed staff on several revenue and policy options. Councilmember Mendez noted the council-authorized commercial cannabis tax (a proposed 7% rate) and asked how that and other potential measures might affect future revenues. Presenter staff said a cannabis business tax at the authorized rate could generate about $2 million if adopted.

Council member Ruh raised concerns about a possible utility-users tax increase, warning it could harm marginal businesses and low-income residents. "An increase in this tax could result in that business simply saying I can't be here anymore," Ruh said, urging careful consideration of any tax changes.

Staff also outlined other revenue options discussed for future consideration, including implementation of a cost-of-services study (estimated to yield about $760,000 annually if adopted), a utility adjustment tied to a voter-authorized rate (projected roughly $600,000), ecommerce tax strategies and community facilities district revenues tied to high-density development.

On several operational matters, staff told the council that the city is pursuing potential reimbursement from the Monte Vista Fire Protection District and has a pending review indicating the county may owe Montclair on sphere-of-influence property-tax flows. City Manager Ed said an HDL review projects that amount could be in the neighborhood of $9.3 million and that the city will need to negotiate with the county.

The presentation reviewed major debt-service commitments, including lease revenue bonds and pension obligation bonds, and reiterated the city's strategy to manage CalPERS unfunded accrued liability (UAL). Staff estimated a near-term UAL charge of about $3.8 million for FY27 and noted that bond financing taken earlier has reduced what the city would otherwise pay in the short term.

After discussion, Mayor Pro Tem Martinez moved to approve the consent calendar, including the FY 2026'27 City budget and the Montclair Housing Corporation budget; Councilmember Mendez seconded the motion. The council adopted the consent calendar 4'0to'0, with Councilmember Lopez absent.

The budget documents presented to council show staff will continue pursuing grants, revenue enhancements and partnerships to improve the city's long-term fiscal position and will return future items (including a possible cannabis ordinance and fee-study implementations) to the council for formal consideration.