MINUTES
CITY COUNCIL – SPECIAL MEETING (WORKSHOP)
MAY 14, 2026
1. CALL TO ORDER – 4:00 p.m.
COUNCIL MEMBERS PRESENT: Mayor Richard Royce
Mayor Pro Tem Cindy Barrington
Council Member Sheri Flynn
Council Member Leroy Miller
Council Member Colleen Wallace
COUNCIL MEMBERS ABSENT: None
OTHERS PRESENT: Phaedra Norton, Assistant City Attorney Elizabeth Gibbs, City Manager
Art Vela, Public Works Director
Vickie Sellers, City Clerk
Sandra Calderon, Deputy City Clerk
2. PUBLIC COMMENTS
Susan Savalinin stated workforce development was missing from the proposed plan. She stated the City should diversify its economic development efforts rather than focus on a single industry. She also suggested increased traffic enforcement as a potential source of additional revenue for the City.
3. WORKSHOP
3.1 Banning’s Workout Plan to Sustainability
Recommendation:
(1) Formally acknowledge the financial status update presented in this report; and (2) Provide direction to staff on the revenue and expenditure options outlined in Milestone 5; and
(3) Direct staff to return in June with a proposed budget for the City's next fiscal year (July 2026 through June 2027), incorporating Council guidance from this workshop.
Elizabeth Gibbs, City Manager, presented the staff report regarding the City's financial outlook. She stated the City was facing significant financial challenges and that staff would present the current fiscal condition, factors contributing to the situation, and potential strategies for recovery. She stated the presentation would include an overview of projected finances and that staff would seek City Council direction regarding future budget development. Ms. Gibbs introduced Jim Morris, financial forecast consultant. She explained that the forecast began with a baseline scenario reflecting the City's current financial trajectory absent corrective action and stated the baseline forecast indicated significant fiscal concerns.
Jim Morris, Urban Futures, financial advisor to the City of Banning, presented the fiscal outlook and discussed the forecasting methodology used in the analysis. He stated the forecast was based on the City's ten-year financial history, regional economic data, and revenue and expenditure trends. He noted that long-range forecasts are inherently conservative due to the uncertainty associated with City of Banning
City Council Minutes
May 14, 2026 Special Meeting – Workshop
2 future economic conditions.
Mr. Morris explained that the baseline forecast assumes current spending and revenue patterns continue over a ten-year period and serves as a starting point for evaluating future policy decisions.
He stated that City Council direction would be incorporated into future scenario forecasts for comparison against the baseline.
Mr. Morris reviewed the baseline financial projections and discussed the City's structural deficit, noting that expenditures have exceeded revenues for several years and that fund balance levels have declined. He stated the City would need to identify opportunities to close the gap between revenues and expenditures and indicated that potential solutions would be discussed later in the presentation.
In response to Council Member Flynn, Mr. Morris stated that the forecast included General Fund expenditures such as salaries, operating costs, and debt service obligations, but did not include enterprise funds.
In response to Council Member Wallace, Mr. Morris discussed the City's CalPERS obligations and stated the City's retirement system was relatively well funded compared to many other jurisdictions.
In response to a member of the public, Mr. Morris discussed previous clients that had faced similar fiscal challenges. He stated that earlier identification of structural financial issues provides greater flexibility in addressing them and noted that timely decision-making would be important moving forward. He stated the City had viable options available to address the projected deficit and discussed examples of how financial forecasting tools can be used to evaluate policy decisions and achieve long-term fiscal stability.
Mike Bush, financial consultant for the City, discussed his experience assisting other agencies through fiscal recovery efforts. He stated that addressing structural deficits often requires evaluating workforce levels, revenue opportunities, and service delivery models. He noted that when fiscal gaps are significant, incremental reductions alone may not be sufficient and broader operational adjustments may need to be considered. He emphasized the importance of providing the City Council with sufficient time and information to make informed policy decisions. He stated he generally did not support across-the-board reductions, as such cuts can disproportionately affect departmental operations, and noted that implementation of fiscal solutions often requires a targeted approach. He stated some decisions would be relatively straightforward while others would be more difficult.
Ms. Gibbs discussed the City's decision to conduct an open and transparent process regarding its fiscal challenges. She stated that City services belong to the residents and that public involvement was an important component of the process. She reviewed the recently adopted Strategic Plan, Banning 2030, and specifically Initiative 4A, "Banning's Workout Plan to Fiscal Sustainability." Ms. Gibbs outlined the five milestones of the initiative, including: (1) completing the City's financial records for Fiscal Year 2024-25 to establish an accurate financial position; (2) reconciling Fiscal Year 2025-26 activity and developing year-end estimates; (3) updating and adopting Fiscal Management Policies; (4) completing a ten-year fiscal forecast and establishing budget guidance; and (5) evaluating options to eliminate structural deficits and restore fund balances. She discussed each milestone and the City’s budget and financial situation in greater detail.
Sue Savage, Banning's elected City Treasurer, stated she had previously warned City officials that current spending levels were not sustainable. She stated that shortly after raising those concerns, she lost access to her office and was limited in her ability to communicate with the public regarding City of Banning
City Council Minutes
May 14, 2026 Special Meeting – Workshop
3 financial matters. She questioned whether her concerns had been inaccurate or simply unwelcome.
She stated the City continued to face significant fiscal challenges and questioned whether the Council was prepared to take the actions necessary to address them. She acknowledged recent efforts to reduce spending but stated expenditures continued to exceed revenues. She also stated the City Treasurer's Office could assist with investment strategies and other financial tools, provided there was a willingness to collaborate.
Frank Connolly stated that policies were already in place to address many of the City's financial issues but had not been consistently followed by previous staff. He emphasized the importance of adhering to adopted policies and stated that policies should be meaningfully implemented if they are to be effective.
Mayor Royce thanked both speakers for their comments and stated he agreed with their observations. He stated he looked forward to the Council taking the matter seriously and adhering to the adopted budget in the upcoming fiscal year.
Ms. Gibbs discussed the City's two primary fiscal challenges: restoring depleted fund balances and addressing the ongoing structural deficit. She stated that both issues required action but would require different solutions.
Ms. Gibbs reviewed potential one-time funding sources available to restore fund balance, including the sale of surplus City-owned properties, potential revenues associated with the Sunset Crossroads development agreement, and options related to existing utility lease agreements. She noted that onetime revenues could be used to stabilize reserves but would not address ongoing operating deficits.
She then discussed potential long-term solutions to address the structural deficit, including a local sales tax measure, economic development initiatives, and continued growth of the City's commercial and industrial tax base. She reviewed timelines and requirements associated with a potential sales tax measure and discussed efforts to promote economic development, including opportunities at the Banning Municipal Airport.
Ms. Gibbs outlined a proposed three-phase approach consisting of: (1) stabilization through expenditure reductions, accounting improvements, and restoration of financial controls; (2) structural alignment of ongoing revenues and expenditures through forecasting and fiscal discipline; and (3) long-term sustainability through economic development, restoration of reserves, and potential voterapproved revenue measures.
Ms. Gibbs stated the City already operates with limited service levels and that expenditure reductions alone would not be sufficient to eliminate the structural deficit. She also discussed municipal bankruptcy, explaining why staff did not believe it was an appropriate solution for the City's circumstances.
Ms. Gibbs concluded by outlining next steps, including finalization of the proposed budget, implementation of updated fiscal management policies, evaluation of service reductions, and initiation of community outreach related to potential future revenue measures. She reiterated the actions being requested of the City Council as part of the workshop.
In response to Council Member Miller, Art Vela, Public Works Director, discussed the five City-owned properties that could potentially be declared surplus and sold.
In response to Mayor Royce, Mr. Vela stated staff could evaluate the financial implications of leasing the properties versus selling them outright.
City of Banning
City Council Minutes
May 14, 2026 Special Meeting – Workshop
4 In response to Council Member Wallace, Mr. Vela stated staff could explore opportunities to connect business owners with developers interested in investing in Banning.
In response to Council Member Flynn, Ms. Gibbs stated it would likely take approximately one year from groundbreaking to opening of a Sam's Club at the Sunset Crossroads shopping center, after which sales tax revenues would begin to be received. She stated an additional year or more would likely be required for planning, entitlement, and approval processes prior to construction.
In response to a public speaker, Mr. Vela discussed a recent condominium development and stated the project would generate ongoing property tax revenues but limited recurring revenues beyond that. He stated one-time revenues associated with the project would primarily consist of development and permit fees.
In response to Council Member Flynn, Mr. Vela stated he was uncertain why City-owned properties had not been declared surplus and sold in the past. He stated it was his understanding that one reason was to maintain control over future development of the properties and noted that would be an important consideration moving forward.
In response to Mayor Royce, Mr. Vela stated the properties had not been actively marketed for sale, with the exception of 150 Ramsey Street.
Mayor Pro Tem Barrington stated that the last City-owned property sold by the City was sold below its appraised value.
Council Members expressed general consensus in support of exploring a potential sales tax measure for the November 2027 ballot and evaluating City-owned properties for potential sale.
In response to questions from the City Council, Mr. Bush discussed the advantages and disadvantages of leasing versus selling City-owned property. He stated that developers often prefer to purchase property outright rather than lease it, particularly when substantial capital improvements are required. He noted that developers may offer less than market value when significant site improvements are necessary, but that long-term sales tax revenues generated by development may offset any reduction in the initial sale price. He also stated that some available parcels may need to be assembled with adjacent properties to support larger development projects and encouraged the City Council to maintain realistic expectations regarding development opportunities.
Council Member Flynn stated she agreed with Mayor Pro Tem Barrington that undeveloped Cityowned properties should be sold rather than leased. She also stated that development-related conditions could potentially be included as part of the sale process.
In response to City Manager Gibbs, Mayor Royce stated he did not believe accelerating utility lease payments was in the City's best interest at this time. Following additional discussion and clarification from staff, the City Council expressed interest in further analyzing the option.
Council Member Flynn discussed the City's utility system and stated the City should consider evaluating the potential sale of utility assets to Southern California Edison.
In response to City Manager Gibbs, Council Members expressed interest in exploring the use of Community Facilities Districts in connection with future development projects.
The City Council discussed personnel costs, service levels, and potential expenditure reductions.
City of Banning
City Council Minutes
May 14, 2026 Special Meeting – Workshop
5 Mayor Royce stated the City should conduct a comprehensive review of departmental structures, staffing levels, operating expenses, and service delivery. He emphasized the importance of prioritizing core governmental functions and basic services before enhanced services.
Council Member Flynn acknowledged that reductions to enhanced services would be difficult but stated temporary reductions may need to be considered as part of the City's fiscal recovery efforts.
Mayor Pro Tem Barrington and Council Member Wallace requested additional information regarding the costs associated with enhanced services before making decisions regarding potential reductions.
Council Member Wallace expressed concern regarding the impact service reductions could have on staffing levels and public safety operations.
Mayor Pro Tem Barrington stated the Council should rely on recommendations from department directors regarding staffing and service levels, noting that reductions should be carefully evaluated to avoid unintended operational impacts.
Mayor Royce discussed additional cost-saving measures that could be explored, including temporary furloughs, contract and benefit negotiations, and other personnel-related adjustments. He stated the City was currently in a period of fiscal triage and would need to focus on achieving alignment between revenues and expenditures.
Mayor Pro Tem Barrington suggested that programs could be designed to be cost-neutral versus cut completely.
Council Member Miller suggested that the City look into in-kind services as a potential place to cut costs or increase revenue.
4. ADJOURNMENT
MOTION
Council Member Wallace motioned to adjourn, seconded by Council Member Miller.
The question was called and the motion carried unanimously.
The meeting adjourned at 6:08 p.m.
Minutes prepared by:
Sandra B. Calderon
Deputy City Clerk
These minutes have been prepared as Summary Minutes in accordance with City Council Resolution 2025-22 and Government Code Sections 36814, 40801, and 54953(c)(2).
The entire discussion of this meeting may be viewed here:
https://banningca.granicus.com/player/clip/317?view_id=1&redirect=true