Measure E oversight committee reviews proposed biennial budget, staff flag $14 million first-year variance

The Measure E Oversight Committee on May 18 heard a preliminary presentation from city finance staff on the proposed biennial budget for fiscal years 2026-27 and 2027-28, including a projected $14 million appropriations variance in the first year.

Selena Andrews, Salinas finance director, told the committee the city is projecting $193,000,000 in revenues for the first year and about $207,000,000 in expenditures, producing a roughly $14,000,000 difference and a projected $17,000,000 variance in the second year. "We will use a mix of strategies to cover the variance," Andrews said, listing potential uses of fund balance, reallocating or deferring capital improvement projects and drawing on infrastructure and facility maintenance reserves. She also noted about $3 million in police development impact fees that could be applied.

Andrews described the city manager's recommendations heading to council, including $1.9 million for a shared center, $1.2 million in additional ongoing labor costs from recently concluded negotiations, unfreezing four positions at an ongoing cost of about $760,000, and a $500,000 community development rental assistance program. She said some positions are funded by a SAFER grant that ends in March and that, if the grant lapses, the positions would likely be absorbed through attrition rather than triggering layoffs.

Citywide staffing was presented as a rolling total: staff listed 677.5 positions at the start of the period, a projected 686.5 during the year as temporary/additions are funded, and about 679.5 positions by June 30, 2028 after SAFER-funded positions end. "We are still working through the numbers," Andrews said, adding that staff will continue to present variances and explain balancing approaches at public meetings.

Public works staff outlined capital improvement program priorities tied to the budget. Adriana Robles, assistant public works director and city engineer, said the CIP carries approximately $65,000,000 in carryover funds across 123 projects and that the city is prioritizing sanitary sewer system investments in the coming two years. Robles identified Lake Street lift station improvements as a major multi-year project and said staff propose allocating about $16.5 million to sewer lift station improvements in FY 26-27. She also cited state- and federally funded projects such as Safe Routes to School corridors and ongoing pavement and sidewalk work.

Committee member Valenzuela asked whether community outreach and public surveys would continue under a biennial budget structure; Andrews said outreach will continue and staff plan to improve timelines to give the public more time to respond. Valenzuela also pressed how staff will communicate that the reported variances are appropriations timing differences rather than structural deficits; Andrews said staff will present the gap and the planned steps to address it at public meetings and in committee updates.

On transient occupancy tax (TOT), Andrews confirmed that TOT is not collected after a 30-day occupancy threshold and said staff plan a TOT audit; committee members discussed using outreach or an audit to understand local TOT collections better.

Committee members asked about the practical effect of losing SAFER-funded positions; Andrews said the positions are generally absorbed through attrition and over-hires and that staff do not anticipate layoffs. Members also requested easier public access to the full list of 123 CIP projects; Andrews said staff are developing a dashboard to show city projects and phase status. When asked about the $5,000,000 shown for Veranda Road, staff said the sum is intended to cover design work and environmental clearances for phased work and that design costs for future phases could be on the order of several million dollars.

One public commenter, Eric Peterson, urged the city to consider TOT changes, noting Salinas' 7% TOT is lower than several nearby jurisdictions that charge about 14% and that the tax is "a great source of money" the city may not be collecting to its fullest potential.

The item was informational; no committee action was taken. The committee adjourned at 4:34 p.m.