CITY OF ARCATA
SPECIAL CITY COUNCIL MEETING
STUDY SESSION
AGENDA
Wednesday, May 13, 2026, 3:30 p.m.
Council Chamber
736 F Street, Arcata
Fiscal Year 2026/2027 Budget Study Session
Special accommodations for the disabled who attend City meetings can be made in advance by contacting the City Clerk at 822-5953. Assistive listening devices are available. _____________________________________________________________________________________ Pursuant to Government Code section 54957.5, all writings or documents relating to any item on this agenda which have been provided to a majority of the City Council, including those received less than 72 hours prior to the City Council meeting, will be made available for public inspection in the agenda binder located on the counter in the lobby at Arcata City Hall, 736 F Street, during normal business hours, and on the City's website at www.cityofarcata.org.
PLEASE NOTE: Speakers wishing to distribute materials to the City Council at the meeting are requested to provide 10 copies to the City Clerk.
_____________________________________________________________________________________ How to Observe and Participate in the Meeting:
Observe:
Members of the public can attend the meeting in person.
Public Comment Participation in Person:
Members of the public may attend the meeting in person and give public comment
1. CALL TO ORDER
2. LAND ACKNOWLEDGMENT
3. ROLL CALL
4. PUBLIC COMMENT
During special meetings, public comment is only taken at the beginning of the meeting. Pursuant to the Brown Act Section 54954.3(a), the public comment period provides an opportunity for people to address the Council only on items that are listed on the Special City Council Meeting Agenda.
5. DISCUSSION
a. Review the General Fund Fiscal Year 2026-27 Proposed Budget; Evaluate Options to Close the Projected Deficit; and Provide Direction to Staff.
b. Review the Transactions and Use Tax (TUTOC) Committee's Recommendation for Measure H Supplemental Budget Requests for Fiscal Year 2026-27; and Provide Direction to Staff. c. Review the City of Arcata Fiscal Year 2026-27 Schedule for Public Hearing and Possible Adoption at the June 17, 2026, Regular City Council Meeting; and Provide Direction to Staff.
6. ADJOURNMENT
May 13, 2026 - City Council Agenda
STAFF REPORT – CITY COUNCIL MEETING
TO: Honorable Mayor and City Council Members
FROM: Merritt Perry, City Manager, and Tabatha Miller, Assistant City Manager/Finance Director
PREPARER: Tabatha Miller, Assistant City Manager/Finance Director DATE: May 13, 2026
TITLE: Review of the General Fund FY 2026-27 Proposed Budget and Evaluate Options to Close the Projected Deficit
RECOMMENDATION:
It is recommended that the City Council receive the staff report, review the options presented for reducing the deficit spending in the City’s FY 2026–27 General Fund Budget, and provide direction to staff.
INTRODUCTION:
The City’s Proposed FY 2026–27 General Fund Budget projects a $2.6 million deficit. Staff have developed several options to reduce the deficit; however, these options may have an impact on City service levels, programs, reserve levels, and the long-term fiscal health of the City of Arcata.
BACKGROUND:
The General Fund accounts for the general operations of the City, including Police, City Administration, and other municipal services. It accounts for financial resources such as property tax, sales tax, business license tax, transient occupancy tax, licenses and permits, fines and forfeitures, and expenditures not required to be accounted for in another fund.
Because General Fund revenues may generally be used for a broad range of governmental services, they are the City’s most flexible revenues and therefore face the greatest competition for limited resources.
The projected FY 2026–27 deficit is the result of several factors, including increased expenditures and reduced revenues. Staff project a 5% decrease in sales tax and transient occupancy tax revenues.
Additionally, supplemental property tax revenues — which are collected in arrears when properties change ownership and are reassessed to market value — are projected to decline.
Another challenge affecting the General Fund Revenue Budget is the increasing cost of subsidies to the City’s Streets and Traffic Safety Funds, which rely on slowly growing gas tax revenues, as well as the Stormwater Fund. Although the Stormwater Fund is an enterprise fund typically supported by user fees, it continues to require increasing transfers from the General Fund to maintain basic service levels.
Overall, General Fund revenues are anticipated to decline by approximately 4%, or $900,000, compared to the FY 2025–26 Budget.
Approximately 63% of staff salaries and benefits are charged to the General Fund. Increased healthcare costs, despite savings associated with transitioning to CalPERS health insurance, combined with a 3% cost-of-living adjustment for all employees and lower vacancies, are projected to increase General Fund personnel services costs by approximately $1 million, or 7.5%.
Additionally, fewer grant funds are available within the General Fund to support Capital Improvement Program projects and other capital expenditures. Even after initial reductions to the FY 2026–27 General Fund Budget, a projected deficit of $2.6 million remains.
DISCUSSION:
The primary purpose of this Budget Work Session is to inform the City Council of the fiscal condition of the General Fund and other dependent funds, including the Streets, Traffic Safety, and Stormwater Funds, and to present options for reducing the projected deficit while maintaining adequate reserve levels.
BUDGET/FISCAL IMPACT:
The budget development process, including direction provided by the City Council during the Budget Work Sessions, will help shape the final budget presented to the City Council for possible adoption on June 17, 2026.
RECOMMENDED COUNCIL ACTION:
1. Receive the Staff report;
2. Consider alternatives to closing the Projected FY 2026-27 General Fund Budget deficit; and
3. Provide staff direction, as appropriate.
STAFF REPORT – BUDGET STUDY SESSION
TO: Honorable Mayor and City Council Members
FROM: Tabatha Miller, Assistant City Manager/Finance Director PREPARER: Tabatha Miller, Assistant City Manager/Finance Director DATE: May 13, 2026
TITLE: Review Transactions and Use Tax Oversight Committee (TUTOC) Recommended Fiscal Year (FY) 2026-27 Supplemental Measure H Budget Requests
RECOMMENDATION:
It is recommended that the Council receive the staff report; review the recommendations from the TUTOC for approval of FY 2026-27 supplemental budget requests for Measure H funding; and provide staff direction as appropriate.
INTRODUCTION:
The TUTOC met on April 14, 2026, to review the supplemental budget requests for Measure H funding. Attached is a summary list of the department requests and the Committee’s recommendations for funding in FY 2026-27.
BACKGROUND:
On March 5, 2025, the Arcata City Council directed the TUTOC to provide financial oversight of the .75% Transactions and Use Tax, which was approved by voters on November 5, 2024, also known as Measure H. The measure received 5,277 votes in favor of the tax increase and 2,818 votes opposed to the measure. The general tax, which required a majority or 50% +1 “YES” votes, was approved with just over 65% of the vote cast. Measure H became effective on April 1, 2025.
At the September 11, 2025, TUTOC meeting, Committee Members discussed the oversight role of the TUTOC. The conversation considered the role of the TUTOC, the appropriate level review and when the TUTOC should weigh in on proposed projects or requests for budget funds. One key aspect of that role focused on how budget requests should be categorized so that they can be related back to the uses of funds outlined in the ballot language.
The Committee agreed and provided direction to staff to create a proposed matrix or set of buckets that reflected the Measure H ballot language but incorporated other priorities highlighted in the Argument in Favor of Measure H, which was printed in the Humboldt County Voter Information Guide and in the informational flyer sent to all residential addresses in Arcata.
DISCUSSION:
At its December 11, 2025, meeting, the TUTOC established the following process for tracking and reviewing Measure H expenditures:
1. Submission of Funding Requests
Funding requests may be proposed by staff, other committees, the City Council, and potentially by members of the public.
2. Staff Determination of Funding Options
Staff will evaluate each request to determine appropriate funding sources, including whether Measure H is an eligible option.
3. Staff Review and Matrix Assignment
Staff will review each request, determine its purpose, and assign it to the appropriate Measure H Matrix category (see below). When appropriate, costs may be split across multiple matrix categories.
4. TUTOC Review
TUTOC will review staff recommendations for Measure H funding to assess:
• Alignment with Matrix categories
• Whether the request is one-time or ongoing
• The proportional allocation of ongoing funds in each Matrix category
5. Recommendations to City Council
TUTOC will provide recommendations to the City Council regarding Measure H funding for the upcoming budget year.
6. Review Measure H Expenditures
TUTOC will review prior year expenditures for consistency with Measure H.
To track the type of expenditures and how those relate to the original Measure H Ballot language, the TUTOC established the following matrix:
PROPOSED MEASURE H MATRIX
Category of Expenditure
A. Emergency & climate change response, such as electrification of the municipal vehicle and equipment fleet, and climate adaptation and mitigation B. Services addressing homelessness and its impacts
C. Alternative police response, including Juvenile Diversion, Community Ambassadors and mental health response to those in crisis D. Maintain and improve sidewalks, shared use paths, bike lanes, roads, transit, and other transportation needs
E. Maintain and improve parks, trails and other recreation facilities F. Other essential services (absolutely necessary and extremely important)
RECOMMENDED COUNCIL ACTION:
It is recommended that the Council receive the staff report; review the recommendations from the TUTOC for approval of FY 2026-27supplemental budget requests for Measure H funding; and provide staff direction as appropriate.
ATTACHMENTS:
A. Summary of Measure H Requests
B. Measure H Requests and Recommendations by Category
# Name
Department
Requesting
1X or
Ongoing New $ Amount
TUTOC
Recommend Description/Note Primary M-H Priorities P % $ Allocation Secondary M-H
Priorities S %
Secondary $
Allocation
1 Liability Insurance City Manager 1X FY 2027 $ 42,075 - Liability, property, earthquake
and tail assessments
Maintain Basic City
Service 100% $ 42,075
Maintain Basic City
Service 0% $ -
2 Encampment Clean-ups City Manager Ongoing Prior to 2026 $ 50,000 $ 30,000 Continue encampment clean-up
services
Impacts of
Homelessness 100% $ 50,000
Impacts of
Homelessness 0% $ -
3 FlashVote City Manager Ongoing FY 2026 $ 10,000 $ - Measure H - Polling System Maintain Basic City
Service 100% $ 10,000
Maintain Basic City
Service 0% $ -
4 Nuisance Abatement Engineering/Building Ongoing Prior to 2026 $ 50,000 $ 50,000 Ongoing Program for Nuisance
Abatement
Maintain Basic City
Service 100% $ 50,000
Maintain Basic City
Service 0% $ -
5 Juvenile Diversion Counselor Public Safety Ongoing Prior to 2026 $ 160,000 $ 160,000 Continue to staff one Juvenile
Diversion Officer, pay and
benefits
Alternative Public Safety
Response 100% $ 160,000
Alternative Public Safety
Response 0% $ -
6 Community Ambassador
Program Public Safety Ongoing Prior to 2026 $ 185,000 $ 185,000 Continue to staff the Community
Ambassador program
Alternative Public Safety
Response 50% $ 92,500
Impacts of
Homelessness 50% $ 92,500
7 Arcata Community Outreach
Police Sergeant Public Safety Ongoing Prior to 2026 $ 273,000 $ 136,500 Continue to staff Outreach
Sergeant
Impacts of
Homelessness 50% $ 136,500
Alternative Public Safety
Response 50% $ 136,500
8 Arcata Community Outreach
Police Officer 50% Public Safety Ongoing Prior to 2026 $ 79,500 $ 79,500 Continue to staff Outreach
Officer @ 50%
Impacts of
Homelessness 50% $ 39,750
Alternative Public Safety
Response 50% $ 39,750
9 Parks facilities and trails
maintenance Env. Services/Parks Ongoing FY 2026 $ 52,000 $ 52,000 Continue to manage open space
lands Facility Maintenance 50% $ 26,000 Parks 50% $ 26,000 10 Climate Change Adaptation
and Energy Efforts Env. Services/Energy Ongoing FY 2026 $ 65,000 $ 65,000 Continue to fund Energy
conservation and climate
adaptation not funded by Excess
Electric user tax Climate Change 100% $ 65,000 Climate Change 0% $ - 11 Recreation programing PT
staffing Env. Services/RecreationOngoing FY 2026 $ 25,000 $ 25,000 Increase part-time Recreation
staffing budget to cover
increased programming and
facility demands
Maintain Basic City
Service 100% $ 25,000
Maintain Basic City
Service 0% $ -
12 Complete Streets
Improvement Program Engineering/Building Ongoing FY 2026 $ 150,000 $ 150,000 Annual Paving and Sidewalk
Complete Streets Improvement
Program Sidewalks 50% $ 75,000 Bike Lanes 50% $ 75,000
13 AVTECH Dispatch Console
Replacement Public Safety 1X FY 2027 $ 182,000 $ -
Replace dispatch radio
consoles - end of life in Oct.
2026 Emergency Response 50% $ 91,000
Maintain Basic City
Service 50% $ 91,000
14 Climate Action Plan -
Climate Manager Funding Env. Services/Energy Ongoing FY 2027 $ 25,000 $ 25,000 Offset by $7,500 from Fund 664
Solid Waste, Regional Climate
Manager at HCAOG or RCEA Climate Change 100% $ 25,000 Climate Change 0% $ - 15 Ballpark Entrance Mural Env. Services/Parks 1X FY 2027 $ 15,000 $ - Visual improvement for back of
the press box, as seen from
entrance Parks 50% $ 7,500 Facility Maintenance 50% $ 7,500 16 Arcata Sports Complex
Irrigation Repair Env. Services/Facilities 1X FY 2027 $ 50,000 $ 50,000 Main Irrigation vault and valves
constructed in 1990s, and at
end of useful life Parks 50% $ 25,000 Facility Maintenance 50% $ 25,000 17 ACC and D Street Table and
Chair Replacement Env. Services/Facilities 1X FY 2027 $ 13,000 $ 13,000 Chairs and tables for the Arcata
Community Center and D Street Facility Maintenance 100% $ 13,000 Facility Maintenance 0% $ - 18 Planned Matching Funds
Annie & Mary Trail Env. Services/Facilities 1X FY 2027 $ 484,011 $ 484,011 Matching funds for $7.2 million
in Grants received for
construction of the Annie & Mary
Trail through Arcata Shared use path 50% $ 242,006 Shared use path 50% $ 242,006 19 Matching Funds for Active
Transport Program (ATP) Engineering/Building 1X FY 2027 $ 120,000 $ 120,000 Matching Funds for Safe Routes
to Schools $2.5 M project Foster
Ave Bike Lanes 50% $ 60,000 Sidewalks 50% $ 60,000
20 Matching Funds for
Reconnect Arcata project Engineering/Building 1X FY 2027 $ 100,000 $ 100,000 Matching Funds for up to $3 M
grant Shared use path 50% $ 50,000 Bike Lanes 50% $ 50,000 $ 2,130,586 $ 1,725,011 $ 1,285,331 $ 845,256
City of Arcata
Measure H Supplemental Budget Requests
FY 2026-27
FY 2026-27 MEASURE H REQUESTS
-
-
-
58,500
71,500
90,000
91,000
135,000
185,000
218,075
318,750
428,750
534,011
- 100,000 200,000 300,000 400,000 500,000 600,000
HIKING TRAILS
TRANSIT
STREETS
PARKS
FACILITY MAINTENANCE
CLIMATE CHANGE
EMERGENCY RESPONSE
SIDEWALKS
BIKE LANES
MAINTAIN BASIC CITY SERVICE
IMPACTS OF HOMELESSNESS
ALTERNATIVE PUBLIC SAFETY RESPONSE
SHARED USE PATH
POSITIVELY IMPACTS CLIMATE Page 9 of 12
FY 2026-27 TUTOC RECOMMENDED
-
-
-
51,000
64,000
75,000
90,000
135,000
185,000
230,500
360,500
534,011
- 100,000 200,000 300,000 400,000 500,000 600,000
TRANSIT
STREETS
HIKING TRAILS
PARKS
FACILITY MAINTENANCE
MAINTAIN BASIC CITY SERVICE
CLIMATE CHANGE
SIDEWALKS
BIKE LANES
IMPACTS OF HOMELESSNESS
ALTERNATIVE PUBLIC SAFETY RESPONSE
SHARED USE PATH
POSITIVELY IMPACTS CLIMATE Page 10 of 12
Q4. Arcata voters approved “Measure H” in November 2024 which is an additional ¾-cent Transactions and Use Tax (“sales tax”) generating about $2.75 million per year.
How would you allocate those funds across these possible priorities?
TUTOC IN FLASHVOTE CATEGORIES
POSITIVELY IMPACTS CLIMATE
75,000
90,000
115,000
230,500
360,500
854,011
- 200,000 400,000 600,000 800,000 1,000,000
OTHER
EMERGENCY & CLIMATE CHANGE
PARKS, TRAILS AND RECREATION
HOMELESSNESS
ALTERNATIVE PUBLIC SAFETY RESPONSE
TRANSPORTATION