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Norco finance director presents FY2027 budget showing $2.5 million structural deficit
Summary
City staff presented the FY2027 preliminary operating and CIP budgets, projecting $31.6 million in General Fund revenues, $34.1–34.2 million in expenditures and a structural deficit of about $2.5 million; staff recommended using reserves short term while pursuing revenue initiatives such as a possible TOT increase.
The City of Norco’s finance director presented the preliminary FY2027 operating budget and capital improvement program, warning the council of a structural deficit of roughly $2.5 million and recommending a combination of reserves and longer‑term revenue strategies to bridge the gap.
Staff told council that the General Fund revenue projection is $31.6 million against projected expenditures of about $34.1–34.2 million, producing a structural deficit driven primarily by rising public‑safety contract costs, salaries and benefits, and inflation‑related cost increases. "We will be projecting what's called a structural deficit, of $2,500,000 based on current scope and scale of the City services," the finance director said during the presentation.
The presentation traced ten‑year trends showing public‑safety and salary growth outpacing CPI and described available one‑time resources: an estimated starting fund balance near $37.4 million, a recruitment replacement fund balance of $6.7 million and Measure R reserves. Staff noted the policy goal of preserving a 25% emergency reserve and said some reserve categories were intended for quicker access for local disasters.
Council members pressed staff on the transparency of presented numbers and how previous budgets used transfers to balance shortfalls. Mayor Grenmeier and multiple councilmembers requested staff repackage the material so the public can more easily see when transfers or one‑time funds are being used to present a balanced budget on paper. The finance director said staff would present alternative formats at upcoming workshops.
Staff recommended using general‑fund reserves in the short term while pursuing revenue funding initiatives and other long‑term strategies to address the structural gap; any tax or ballot measure would require additional council direction and public outreach. The council scheduled further budget workshops to examine CIP priorities, Measure R projects and departmental detail.
