Finance director previews FY 2026–27 budget; cautions limited new operating room despite revenue uptick

Finance Director Matt Baker opened the council's budget discussion with a review of current balances and initial estimates for fiscal 2026–27, stressing a conservative approach to revenue forecasting and the city's goal of a structurally balanced budget. Baker said the city began the year with roughly $15.6 million in reserves and $13.6 million in net operating revenues, and that early revenue trends suggest collections will be higher than originally budgeted.

"Our goal is to operate in a structurally balanced budget," Baker told the council, explaining that while some revenue sources are running ahead of estimates, many numbers remain preliminary as the fiscal year progresses. He said some revenue lines are above budget — planning fees and certain property tax pass‑throughs were stronger than anticipated — while room remains limited for increased operating expenditures without adjusting fees or reserves.

Baker highlighted major capital work planned or underway: the 5 Corners pedestrian improvement (where the city has spent about $2.4 million of a $3.3 million budget to date), planned revetment repairs along Pebly Beach Road pending federal clearance, and a proposed 26‑unit city workforce housing feasibility study. He also presented preliminary harbor figures showing growth in nightly moorings and transfer fees and noted recent grant awards that reduce net capital costs.

Baker emphasized that many numbers are estimates and that the presentation was intended to inform council's policy decisions as staff refines revenue and expenditure projections in the coming months. No formal budget adoption occurred at this meeting; the presentation set the framework for future hearings and formal adoption.