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5-12-2026 Presentations and other supplemental docs combined as of 344 pm

Carmel-by-the-Sea City Council
May 12, 2026

Document
5-12-2026 Presentations and other supplemental docs combined as of 344 pm
Meeting
May 12, 2026
Body
Carmel-by-the-Sea City Council
Original file
2.3 MB
Text extracted from the city's file for reading and search. Open the original on carmelbytheseaca.api.civicclerk.com. That file is the official record.

Fiscal Year 2026-2027
Recommended Budget
Expenditures

CITY OF CARMEL-BY-THE-SEA
May 12, 2026
FY 26-27 Budget | $41.3 MILLION
$18.1M $14.1M $8.5M $519K

EMPLOYEES
Salaries & Benefits, Pension
Unfunded Liability,
Worker’s Comp

COMMUNITY
Operating expenditures for
services and supplies
CIP
public safety, hardscape and
green infrastructure,
technology for operations,
environmentally friendly
vehicles, facilities’ deferred
maintenance
DEBT
2020 Refunding Lease
Revenue Bonds
2 Expenditures at-a-Glance
Type of Expenditure
FY26-27
Recommended
Budget
% of
Budget
Salaries & Benefits $15,030,430 36%
Outside Services 11,286,625 27%
Other Expenditures 2,978,747 8%
Pension 2,972,561 7%
Capital Outlay 8,503,680 21%
Debt Service 518,900 1%
Total $41,290,943 100%
Salaries & Benefits, 36%
Outside Services, 27%
Other Expenditures, 8%
Pension, 7%
Capital Outlay, 21%
Debt Service, 1%
FY 26-27 Expenditure by Type
3 Expenditures by Function
Administration
Citywide
Council
Debt
Legal
Community Planning &
Building
Ambulance
Fire
Police
Economic Development
Library
Community Activities
Public Works
Capital
FY 26-27 Expenditures by Function
4 Staffing at-a-Glance
Administration
Administrative Technician 0.00 1.00 1.00
Administrative Coordinator 1.00 0.00 (1.00)
IT Analyst 0.00 1.00 1.00
IT Help Desk/Technician 1.00 0.00 (1.00)
IT Interns 0.00 0.50 0.50
Community Activities
Community Services Assistant 0.50 0.00 (0.50)
Administrative Analyst 0.00 1.00 1.00
Executive Assistant 0.50 0.00 (0.50)
Library
Executive Assistant 0.50 0.00 (0.50)
Administration Technician 0.00 1.00 1.00
Hourly Librarian 1.00 0.50 (0.50)
Public Works
Streets Maintenance Worker III 2.00 1.00 (1.00)
Streets Maintenance Worker I/II 5.00 6.00 1.00
Capital Program Manager 0.00 1.00 1.00
Police
Police Services Officer 6.00 5.50 (0.50)
Community Services Officer/Animal Control 2.00 2.50 0.50 Total Change in FTE 1.50

92.1 72.5

94.2 96.2 96.2 97.3 90.5 92.0
-10.0

10.0 30.0

50.0 70.0

90.0 110.0
130.0
FTE
Funded FTE by Fiscal Year
19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27

24.0 Police 26.0
Public
Works

12.5 Admin

12.0 CP&B 12.5
Libr…

5.0 City
Co… $0
$1
$2
$3
$4
$5
$6
Millions
5 Staffing at-a-Glance
Department
FY26-27
Recommended
Budget
% of
Budget
Police $4,845,671 32%
Public Works 4,190,843 28%
Administration 2,632,632 18%
Community Planning & Building 1,760,572 12%
Library 1,396,947 9%
Community Activities 152,937 1%
Council 50,828 0%
Total $15,030,430 100%
6 Department Expenses
Departments At-a-Glance
7 Departments at-a-Glance
Public Works
Contract services
• Pressure washing ($20k)
• Janitorial contract ($294k)
• Tree work ($300k)
• Landscape maintenance ($290k)
• Habitat Monitoring ($30k)
• ASBS Watershed Monitoring ($26k)
Public Works
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $3,074,040 $4,034,668 $3,529,263 101-119-00-42001 Contract Services $1,964,806 $1,452,570 $1,729,090 101-119-00-42009 Advertising and Legal Notice 5,260 4,075 4,400 101-119-00-42101 Office Supplies 1,263 6,000 5,000
101-119-00-42102 Publications & Subscriptions 6,615 19,000 12,360 101-119-00-42104 Safety Equipment and Supplies 13,898 11,000 10,000 101-119-00-42105 Materials and Supplies 230,425 269,475 221,375 101-119-00-42106 Small Tools and Equipment 2,611 17,500 10,800 101-119-00-42107 Gas and Oil 32,023 38,000 41,000
101-119-00-42202 Equipment Maintenance 13,515 30,555 32,000 101-119-00-42203 Vehicle Maintenance 27,081 39,500 40,500 101-119-00-42301 Training & Education 9,602 14,000 18,800 101-119-00-42302 Conferences & Meetings - - 2,500
101-119-00-42304 Dues & Memberships 1,426 4,060 4,195
101-119-00-42403 Printing 192 0 2,500
101-119-00-42408 Permits and Licenses 11,814 14,500 15,225 101-119-00-42409 Rentals 6,879 10,000 20,600
101-119-00-42999 Contra Operating Expenses - - (12,100) Services & Supplies Subtotal $2,327,409 $1,930,235 $2,158,245 Total $5,401,449 $5,964,903 $5,687,508
8 Departments at-a-Glance
Community Planning &
Building
Contract Services
• Various updates
• Scanning and Digitizing rolled
plans
• STR Host Compliance
Community Planning & Building
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $1,521,560 $2,174,995 $2,189,615 101-115-00-42001 Contract Services $221,867 $179,135 $179,185 101-115-00-42009 Advertising and Legal Notice 500 0 12,000 101-115-00-42101 Office Supplies 2,633 7,100 2,000
101-115-00-42102 Publications & Subscriptions 1,673 18,138 15,850 101-115-00-42104 Safety Equipment and Supplies 2,638 1,700 2,600 101-115-00-42106 Small Tools and Equipment 0 0 500
101-115-00-42107 Gas and Oil 250 100 0
101-115-00-42115 Other Supplies 2,962 4,300 1,400
101-115-00-42301 Training & Education 9,225 11,305 8,195 101-115-00-42302 Conferences & Meetings 5,735 10,700 6,620 101-115-00-42304 Dues & Memberships 5,084 6,760 6,930
101-115-00-42403 Printing 1,334 1,150 4,800
Services & Supplies Subtotal $253,902 $240,388 $240,080 Total $1,775,462 $2,415,383 $2,429,695
9 Departments at-a-Glance
Police
Contract Services:
• Automated criminal justice
system ($72k)
• Monterey County IT Connection
($50k)
• Body cameras & tasers ($28k)
• Tracnet ($30k)
• T2 Parking Management ($21k)
Police
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $4,296,501 $5,058,650 $4,845,671 101-116-00-42001 Contract Services $245,801 $250,000 $329,393 101-116-00-42005 Community Promotions 1,067 5,300 2,000 101-116-00-42101 Office Supplies 5,600 8,800 5,000
101-116-00-42102 Publications & Subscriptions 308 420 350 101-116-00-42104 Safety Equipment and Supplies 35,821 51,500 79,800 101-116-00-42107 Gas and Oil 27,306 35,000 25,000
101-116-00-42201 Building Maintenance 779 2,000 0
101-116-00-42202 Equipment Maintenance 35,900 85,700 28,000 101-116-00-42203 Vehicle Maintenance 48,273 40,000 40,000 101-116-00-42301 Training & Education 44,579 50,000 30,000 101-116-00-42304 Dues & Memberships 1,369 1,400 6,300
101-116-00-42403 Printing 238 6,300 1,700
101-116-00-42404 Shipping/Postage/Freight 13 600 200
101-116-00-42405 Telephone and Communications 2,042 10,000 0 101-116-00-42415 Other Expenditures 25,407 12,000 8,000 Services & Supplies Subtotal $474,503 $559,020 $555,743 Total $4,771,004 $5,617,670 $5,401,414
10 Departments at-a-Glance
Fire
Contract Services:
• City of Monterey fire services
($3.7M)
11 Fire
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
101-117-00-42001 Contract Services $3,520,760 $3,558,924 $3,727,484 101-117-00-42005 Community Promotions 1,150 1,000 1,000 101-117-00-42103 Medical Supplies 0 3,000 3,000
101-117-00-42104 Safety Equipment and Supplies 5,749 0 0 101-117-00-42107 Gas and Oil 8,339 22,000 22,000
101-117-00-42202 Equipment Maintenance 1,257 4,500 4,500 101-117-00-42203 Vehicle Maintenance 103,192 40,000 40,000 Total $3,640,447 $3,629,424 $3,797,984
Departments at-a-Glance
Ambulance
Contract Services:
• City of Monterey ($2.2M)
• Billing for ambulance services
($89K)
12 Ambulance
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $1,307,271 $349,339 $0
101-118-00-42001 Contract Services $158,533 $2,456,110 $2,224,489 101-118-00-42103 Medical Supplies 50,302 48,150 45,000
101-118-00-42104 Safety Equipment and Supplies 480 17,500 5,000 101-118-00-42107 Gas and Oil 8,789 21,000 15,000
101-118-00-42201 Building Maintenance 2,177 5,000 5,000 101-118-00-42202 Equipment Maintenance 663 4,000 0
101-118-00-42203 Vehicle Maintenance 31,951 70,000 35,000 101-118-00-42301 Training & Education 5,620 15,000 0
Services & Supplies Subtotal $258,514 $2,636,760 $2,329,489 Total $1,565,785 $2,986,099 $2,329,489
Departments at-a-Glance
Library
Contract Services:
• Art storage, restoration,
transportation
Community Activities
Contract Services:
• Farmer’s Market
• 3rd Thursday events
• Tree lighting
• Stage rental
• Car week shuttle
Library
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $1,223,951 $1,521,984 $1,396,947 101-120-00-42001 Contract Services $5,666 $10,500 $15,000 Services & Supplies Subtotal $5,666 $10,500 $15,000
Total $1,229,617 $1,532,484 $1,411,947
Community Activities
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $0 $0 $0
101-121-00-42001 Contract Services $81,616 $111,040 $107,890 101-121-00-42005 Community Promotions 11,717 9,340 19,090 101-121-00-42009 Advertising and Legal Notice 3,410 6,950 5,000 101-121-00-42101 Office Supplies 169 200 200
101-121-00-42403 Printing 241 1,440 1,530
Services & Supplies Subtotal $97,153 $128,970 $133,710
Total $97,153 $128,970 $133,710
13 Departments at-a-Glance
Office of the City Administrator
(Administration, Clerk, Finance, IT, HR)
Contract Services: Financial audits and
AV service for meetings
Publications & Subscriptions: IT licenses
Employee Appreciation: two Citywide
staff lunches
Computer Non Capital: Replacements
for outdated computers
14 Office of the City Administrator
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $2,109,231 $1,587,349 $2,270,811 101-111-00-42001 Contract Services $216,785 $566,500 $289,054 101-111-00-42002 Recruiting Services 29,765 57,500 50,500 101-111-00-42003 Auditing Services 77,325 96,500 75,000 101-111-00-42006 Records Management 7,528 25,000 26,000 101-111-00-42009 Advertising and Legal Notice 15,209 21,000 10,700 101-111-00-42015 Other Services 27,052 24,800 24,950
101-111-00-42101 Office Supplies 7,860 7,875 3,000
101-111-00-42102 Publications & Subscriptions 318,773 275,400 261,397 101-111-00-42105 Materials and Supplies 2,048 500 3,000 101-111-00-42106 Small Tools and Equipment 492 0 500
101-111-00-42115 Other Supplies 0 5,000 250
101-111-00-42202 Equipment Maintenance 7,486 8,750 10,000 101-111-00-42301 Training & Education 7,888 18,400 12,400 101-111-00-42302 Conferences & Meetings 13,636 17,625 18,200 101-111-00-42304 Dues & Memberships 9,426 3,580 6,780
101-111-00-42306 Employee Programs 2,784 6,000 6,000
101-111-00-42307 Employee Appreciation Costs 19,595 20,000 17,000 101-111-00-42403 Printing 8,722 5,900 9,000
101-111-00-42404 Shipping/Postage/Freight 16,708 500 500 101-111-00-42405 Telephone and Communications 161,058 125,000 125,000 101-111-00-42406 Bank & Merchant Fees 6,321 4,500 34,000 101-111-00-42407 Computer Non Capital 10,615 40,000 33,750 101-111-00-42410 Pre-employment Costs 2,418 4,000 3,000 Services & Supplies Subtotal $969,492 $1,334,330 $1,019,981 Total $3,078,723 $2,921,679 $3,290,792
Departments at-a-Glance
Non-Departmental
Liability Insurance Premium

PERS UAL
Insurance Claims Paid: Increase in
out-of-pocket per occurrence
Utilities-Citywide
Non-Departmental
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
101-130-00-42501 Liability Insurance Premium $964,366 $1,103,940 $977,140 101-130-00-42503 PERS UAL Payment 2,298,486 2,708,158 2,972,561 101-130-00-42504 Insurance Claims Paid 3,481 100,000 450,000 101-130-00-42505 Utilities 493,804 464,000 477,000
101-130-00-42506 Property Tax Assessments 94,134 100,000 100,000 101-130-00-42508 Unemployment Costs 17,067 15,000 18,000 101-130-00-42509 Citywide Mailing Costs 0 24,845 25,000 101-130-00-42510 Retiree Health Share 84,578 87,000 85,000 101-130-00-42511 County Property Tax Admin Fees 57,868 75,000 75,000 101-130-00-42512 Forest Theater Utilities 0 10,000 10,000 Total $4,013,784 $4,687,943 $5,189,701
15 Unfunded Pension Liability
"UAL"
Unfunded pension liability
Assessed by CalPERS
Increasing 27% over next 6
years where the UAL annual
payment will peak at $3.5M in
FY32-33
No $1M Section 115 Pension
Mitigation set-aside budgeted
for FY26-27
16 Departments at-a-Glance
City Council
Community Promotions:
• Discretionary Grants $25K*
• Mail Service $78K
Legal/ City Attorney
Contract Services: decrease based
on more controlled access to City
Attorney services
City Council
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Salaries & Benefits Subtotal $43,525 $35,187 $50,828
101-110-00-42005 Community Promotions $127,060 $128,500 $112,500 101-110-00-42007 Regional Memberships 47,428 53,065 54,240 101-110-00-42101 Office Supplies 0 450 500
101-110-00-42302 Conferences & Meetings 14,105 31,550 18,350 Services & Supplies Subtotal $188,594 $213,565 $185,590 Total $232,118 $248,752 $236,418
City Attorney
Account Number Account Description
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
101-112-00-42001 Contract Services $528,109 $442,000 $395,000 101-112-00-42004 Legal Costs 22,211 75,000 100,000
Total $550,320 $517,000 $495,000
17 Debt Service
Sunset Center - 2020 Refunding Lease Revenue Bonds
Matures on November 1, 2032
18 FY 24-25 Debt Service by Bond
Bond Principal Interest Fee Total
Sunset Center $405,000 $111,400 $2,500 $518,900
Total $405,000 $111,400 $2,500 $518,900
Departments at-a-Glance
Economic Development
City contributions:
• Support business development
• Visit Carmel to be reduced to
$90k
Economic Development
Account Number Details
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
101-122-00-42008 SCC- Sunset Center Operating Grant $750,000 $750,000 $750,000 101-122-00-42008 See Monterey 226,297 226,297 292,947
101-122-00-42008 Visit Carmel 120,000 120,000 120,000
101-122-00-42008 Carmel Chamber of Commerce 60,000 60,000 60,000 Total $1,156,297 $1,156,297 $1,222,947
19 Operating Expenditure Recap
• Costs Cuts
• Current staffing levels reflect filled vacancies plus two new positions
• No new COLA increases
• (Represented and At-Will)
20 Operating Expenditure Cost Cuts
Description Decrease
More focused tree maintenance effort $ (300,000)
Fewer fuel mitigation projects (150,000)
Reduced landscaping maintenance (50,000)
reduced utilization (47,000)
Less digitization, trimmed consultants (45,000)
Fewer TOT and sales tax audits (17,500)
Look for grants (12,750)
Fewer or smaller grants (11,000)
Reduce holiday decorations (5,400)
Less records digitization (5,000)
Reduced use of outside assistance (5,000)
Smaller appreciation meeting (3,500)
Fewer and smaller advertisements (2,425)
Across the board review of contracts (118,853)
Across the board price shopping (24,750)
Fewer conferences and trainings (18,400)
21 Capital Projects at-a-Glance
22 Category Amount % of Budget
Streets & Sidewalks $1,475,000 17%
Drainage 475,000 6%
Facilities 4,175,000 49%
Forest, Parks & Beach 525,000 6%
Contingency 600,000 7%
Project Management 673,680 8%
Vehicle & Equipment 580,000 7%
Total $8,503,680 100%
Capital Projects at-a-Glance
Category Project Budget
Streets & Sidewalks Street Improvement Project - Design $200,000 Streets & Sidewalks Street Preventative Maintenance Program 850,000 Streets & Sidewalks Resurfacing Parking Lots - Sunset Center 150,000 Streets & Sidewalks Sidewalk Improvement Project 275,000 Drainage Drainage Improvement Project - Design 275,000
Drainage Scenic Drainage Improvement & Pathway Restoration 200,000 Facilities Picadilly Restroom - Design 80,000
Facilities ADA Upgrades 20,000
Facilities Sunset Center Piano Room Floor 25,000
Facilities Sunset Center Guardrail Replacement 50,000
Facilities Fire Station Alert System Upgrade 200,000
Facilities Police Station / Public Works Architecture 3,500,000 Facilities Flanders Foundation Repair 150,000
Facilities Transfer Switches for City Hall & Vista Lobos 100,000 Facilities Fire Service Backflow Preventer Upgrade 50,000 Forest, Parks & Beach Sand Ramp 8th Avenue Repair Project 125,000 Forest, Parks & Beach Eroded Bluff Emergency Repair 200,000 Forest, Parks & Beach North Dunes Habitat Restoration Area - Invasive Species Removal 200,000 Project Management Project Management 673,680
Contingency CIP Contingency 600,000
Vehicle & Equipment PW Patch Truck 125,000
Vehicle & Equipment PD Radar Trailer 25,000
Vehicle & Equipment PD Parking Vehicle 50,000
Vehicle & Equipment PD Admin Vehicle EV 75,000
Vehicle & Equipment PD Animal Control Vehicle 75,000
Vehicle & Equipment Police Radios Year 6 of 6 30,000
Vehicle & Equipment Tracnet Replacement (RIMS Sun System) 200,000 Total $8,503,680
23 Capital Projects Deferred Maintenance
24 • Community and City Council Priority
• $100M of Deferred Maintenance
• 10-year capital improvement plan
• Increased staffing:

CIP Program Manager (1 FTE)
Five-Year CIP Plan
25 FY 26-27 Budget at-a-Glance
26 $32.8m
Budgetary Policy
Policy states that:

Total Expenditures, excluding CIP, shall not exceed 90% of Budgeted Revenue.

Total Capital Outlay shall be a minimum of 10% of Budgeted Revenue. 27 Policy states that:

A balanced budget is a budget in which total funding sources meet or exceed uses.

Fund Balance
• Reduced by Revenue Shortfall
• Reduced by Assignment of $1 million to
Housing Trust Fund
28 Projected Fund Balance Summary
29 Projected Fund Balances
CIP Reserve and Available fund balance as of June 30, 2025 (per financial statements) $21,758,242 Projected operating deficit FY 25-26 (per Five Year Forecast) (2,071,955) Set aside to fund Unfunded Pension Liabilities ("UAL") (1,000,000) Projected Available Fund Balances June 30, 2026 18,686,287 Projected operating deficit FY 26-27 (per budget) (2,238,204) Set aside to fund Housing Trust Fund (1,000,000)
Projected Available Fund Balances June 30, 2027 $15,448,083 Budget Timeline
May 5, 2026
FY 26-27 Budget Overview Presentation
May 5–8, 2026
Submit budget questions
May 12, 2026
FY 26-27 Budget Workshop on May 12, 2026 @ 4:00pm
• Details provided on revenue, expenditures, staffing
• Responses to budget questions received as of May 8
June 2, 2026
FY 26-27 Budget Adoption scheduled for June 2, 2026
• Inclusive of revisions per direction received on May 5 and May 12
• Responses to budget questions received through May
29 30
31 QUESTIONS…

CITY OF CARMEL-BY-THE-SEA
Fiscal Year 2026-2027
Recommended Budget
Overview

CITY OF CARMEL-BY-THE-SEA
May 12, 2026
Budget Process
• May 5, 2026: FY 26-27 Recommended Budget Overview Presentation • May 5 – May 8, 2026: Submit budget questions
• FY 26-27 Budget Workshop on May 12, 2026 @ 3:30pm
• Details provided on revenue, expenditures, staffing
• Responses to budget questions received as of May 8
• FY 26-27 Budget Adoption scheduled for June 2, 2026
• Inclusive of revisions per direction received on May 5 and May 12 • Responses to budget questions received through May 22 2 • Provide an overview of the FY 26-27 Recommended Budget • Projected Revenue
• Projected Expenditures: General Fund, CIP, Debt
• Projected Fund Balance
• Receive Council direction for any changes
Purpose and Next Steps
3 Budget Puzzle
4 FY 26-27 Budget at-a-Glance
FY26-27 Recommended Revenues $39,052,739
General Fund Expenditures 29,295,802
Debt Service Expenditures 518,900
Pension Unfunded Liability Mitigation Expenditures 2,972,561 Capital Outlay Expenditures 8,503,680
FY26-27 Recommended Expenditures $41,290,943
Use of Fund Balance for Capital Projects $2,238,204
Funded Full Time Equivalent (FTE) positions 92.0
5 FY 26-27 Budget vs 85/15 What-if Split
6 Fiscal Year 2026-2027
Recommended Budget
Revenue

CITY OF CARMEL-BY-THE-SEA
May 12, 2026 7
2026-2027 Revenue Objectives
• Discuss sources
• Discuss trends
• Focus on major revenues
• Project revenues
8 Revenues at-a-Glance - $39M
9 Revenues: Historical Trends
Fiscal Year * TOT Sales ** Property
2018 $6,329,074 $5,476,123 $6,163,959
2019 $6,882,015 $5,719,521 $6,496,558
2020 $5,115,277 $4,766,313 $6,690,948
2021 $5,339,285 $7,028,041 $7,389,656
2022 $7,787,643 $9,596,727 $7,694,722
2023 $8,455,742 $9,338,107 $8,136,928
2024 $8,579,344 $10,078,592 $8,770,848
2025 $9,559,155 $10,870,120 $9,147,434
2026 Estimated $9,526,737 $10,992,917 $9,445,000
2027 Budget $9,764,905 $11,190,440 $9,680,989
*Ending June 30th
** Combination of Bradley Burns & Measure C 1.5%
10 Major Revenues - Performance
Budget Assumptions:
• Property tax +2.5%
• Sales tax +1.8%
• TOT +2.5%
11 Key
Revenues
FY 22-23
Actual
FY23-24
Actual
FY24-25
Actual
FY25-26
Estimated
Actual
FY26-27
Recommended
Budget
Property Taxes $8,136,928 $8,770,848 $9,147,434 $9,445,000 $9,680,989 Sales Tax $3,469,412 $3,692,470 $3,956,282 $4,092,183 $4,166,843 Measure C $5,868,695 $6,386,122 $6,913,837 $6,900,734 $7,023,597 TOT $8,455,742 $8,579,344 $9,559,155 $9,526,737 $9,764,905 Total $25,930,777 $27,428,783 $29,576,709 $29,964,653 $30,636,334 Charges For Services - $3.6 M
12 Category Budget % of Budget
Admin $174,177 5%
Public Safety 174,047 4%
Ambulance 1,477,494 41%
Building 976,652 27%
Planning 477,601 13%
Public Works 215,144 6%
Community Activities 81,322 2%
Total $3,576,437 100%
Other Revenue - $4.8 M
13 General Revenue Outlook
• Current FY25-26 budget is on-track
• Budgeted FY 26-27 reflects uncertainty
and instability
• Unknown future "normal"
• Budget less conservative than prior years
• Triannual budget adjustments as needed
• Hotel fluctuations in pricing and rooms?
• Sales tax recover or decrease?
• High volatility in
revenue sources?
14 CITY OF CARMEL-BY-THE-SEA
Revenue Questions…?
Expenditures to follow
15 1
FY 26-27 Budget Questions

1. What were the causes behind the 3% rise in the City’s unemployment rate as presented in the FY25 ACFR? (T. Twomey 3/24/26)
The City reports unemployment rates as published by the State of California Employment Development Department (EDD). The City of Carmel-by-the-Sea unemployment rate is 4.3%, below both Monterey County and California rates. It has been recently reported that Monterey County’s unemployment rate climbed to 10.6% in January 2026, almost double the California statewide rate of 5.5%. The exact cause of the rise in the City’s unemployment rate is unknown and most likely a combination of multiple factors such as slowed hiring, high cost of living, and regulatory and wage pressures. A rise in the unemployment rate can sometimes be a statistical anomaly where residents who were previously out of the labor force (retired or living off assets) start looking for work again and are counted as unemployed until they find a role.

2. Is there a granular list of those items that make up the reserved budget dollars for future years? (N. Twomey 3/24/26)
As of June 30, 2025, per the most recent audited financial statements, the fund balance reserves were comprised as follows:

Nonspendable:

Prepaid items $14,936 Nonspendable Amounts that cannot be spent because they are not in spendable form, or are legally or contractually required to be maintained intact.

Restricted: Restricted Amounts subject to externally enforceable legal restrictions.

Transportation 46,425 Grant received for the purpose of road & transportation improvements.

Debt service 34,807 Funds set aside for debt payments.

Library 1,520,824 Funds belonging to the Library Special Revenue fund.

Asset seizure 5,838 Funds held according to the rules for seized assets.

Public parking 788,677 Funds held according to the rules for parking mitigation.

Pensions 4,438,844 115 Trust holding funds for payment of the Unfunded Pension Liability.

Assigned: Assigned Amounts intended to be used for specific purposes, but do not meet the criteria of restricted or committed.

Operational
reserves
15,997,900 Operations reserve held according to City policy.

Capital projects 4,702,557 Unspent portion of approved Capital Improvement Projects.

Unassigned 17,055,685 Unassigned The residual classification for the general fund; may be positive or negative. In other funds, it represents deficit balances.

Total fund bal. $44,606,493
2 3. Please provide a breakdown of the major balance sheet accounts as of the end of FY 26- 27 (projected) -- unassigned fund balance, opex reserve, etc. (Buder 5/5/2026) With the above audited financial statements as a starting spot, we can begin to project the impact that the budget will have on the fund balance. Based on the significant investments being made in Capital Outlay, an operating deficit of $2.1 million is forecast for FY 25-26. A further deficit of $2.2 million is budgeted for the FY 26-27 fiscal year. In addition to these uses of fund balance, the last of five years of $1 million set-asides to the 115 Trust took place in FY 25-26. The proposed FY 26-27 budget includes a new $1 million set-aside for a Housing Trust fund. As a result, the net CIP reserve and Available fund balance is forecast to decrease from $21.8 million as of June 30, 2025 to $15.4 million as of June 30, 2027.

4. Why does the additional $1M pension mitigation payments end in FY26-27 in the City’s 5-year forecast? (N. Twomey 3/24/26)
For forecasting purposes, FY26-27 included a proposed $1M contribution to a Housing Trust Fund rather than continuing contributions to the Section 115 Pension Mitigation Trust for Council to consider and provide direction. There is no Resolution that requires the City to make an annual pension mitigation contribution after FY25-26, it was voluntary each year.

5. Not considering Fire and Ambulance, what are we contracting or consulting out? In some cases, would it be cheaper to bring it back in house? (H. Ross 3/24/26) The City uses approximately 120 contract service vendors throughout its departments. Please see Exhibit A at the end of this document for a list with services provided. Most of the City’s contractors are niche services that require highly specific skills which are only utilized by the City for limited periods of time. During the budgeting process, Administration reviews with each Department their need for services and explores whether it can be performed in house or needs support from contractors or consultants.

6. Should the City be considering being self-insured for health insurance? Can analysis be done to see if that would save the City money over insuring out? There may be some risk in being self-insured, but it is worth looking at. (H. Ross 3/24/26) The City’s current health plan expenditure is approximately $2.3 million, at an average cost of roughly $26k per employee. With fewer than 100 employees, the City’s risk exposure is significant.

We have explored participation in risk pools and JPA healthcare structures, but given our location in one of the more medically expensive regions in the state, we have not qualified for program 3 membership that would mitigate claim risks. The City has explored options over the years and remains committed to continuing to evaluate available options as part of our long term financial planning efforts, and will do so again this year.

7. It would be interesting to see a headcount from 5 or 10 years ago to now to understand have we really added employees or have employee levels stayed the same and we are just adding salaries. (H. Ross 3/24/26)

8. What if the City Hall property was sold to help contribute to the funds needed to create a City Hall/Police/Public Works building, creating a centralized governmental facility? (? 3/24/26)
During the Strategic Priorities Planning Session in January, the City Council briefly discussed selling some of its properties, but quickly determined that it was not a priority to begin exploring what this would look like.
4 9. Can we see a commitment by the administration to improve services instead of asking the Council to trade-off services to lower our expenses? How did we survive the same level of services back in 2021 that didn’t require a huge amount of increase in expenses? Can we get by with the staffing levels we had in 2021 and what would that impact be? (J. Beck 3/24/26)
Fiscal Year 2021 was an anomaly due to the immediate response to the pandemic, which included reduced travel, limited in-person interaction, and temporary changes in service delivery expectations. During that period, the City reduced staffing levels and limited expenditures in response to revenue reductions, while demand for certain municipal services also temporarily decreased. As noted in question #7 above, the City has historically operated with approximately 80–90 employees to maintain normal service levels. The expenditure reductions reflected in the proposed budget are not intended to reduce service quality, but rather to reduce or defer certain internal system upgrades, limit the use of third-party contracted services where feasible, and maximize available in-house staff capacity. The City would not be able to operate effectively with 68 employees without significantly increasing reliance on contracted services and external consultants. In practice, this would shift expenditures from in-house staffing to outside service providers in order to meet ongoing operational demands, including tree maintenance, roadway repair and infrastructure maintenance, administration of a high volume of business and residential construction activity, increasing environmental compliance requirements, and other core municipal services that continue to drive workload demands across departments. It is also worth noting that five of the employees that make up the total count are the City Councilmembers.

The City will be looking to recategorize these positions so that the total (working) employee count is not overstated.

10. How many more years of payments do we have on the Sunset Center 2020 Refunding Lease Revenue Bonds? (Dramov 3/24/26)
The final debt service payment will be made in the Fall of FY 2033. Therefore, there are seven more annual payments to be made.

11. When I think of something that’s called deferred maintenance, it is going to be delayed with a certain factor of time. When the City is deferring maintenance, what is your time frame? And why are the same items identified in the budgeted CIP and on the deferred maintenance list? (M. Ruess, 4/6/2026)
The deferred maintenance list are things that have been deferred in the past that the City has not done and need to catch up on, not things that the City will be deferring more into the future. This is why you see the same things listed in the CIP because that is the City taking action to do the things that are on the deferred maintenance list. .

12. What happened to the Sunset Center North Lot electrical vehicle project? (A. Dramov 4/6/2026)
A budget of $100,000 had previously been allocated in the FY 2024–25 Adopted Budget for the Sunset EV North Lot electrical panel upgrade. This amount has been combined into the Vista 5 Lobos EV Charging Station and building electrical panel project and will be carried forward after Vista Lobos is completed.

Design for the Sunset EV North Lot upgrade is approximately 75% complete, but moving the project forward will require finishing the design and obtaining an engineer’s cost estimate.

Once the final estimate is available, additional funding will be needed so the project will come back to the City Council for their consideration.

13. Are there any kind of grants that the City could apply for that could help with some of our Beach/Environmental CIP project costs? (A. Dramov & M. Ruess 4/6/2026) The City has been looking out for grants and have applied for a few, but the City is not qualifying for many of them. We continue to keep our eyes out, while keeping in mind the overhead required to manage these grants as we look for opportunities.

14. Instead of splitting out a project over multiple years, could we do it as a complete project and maybe negotiate the price of the project down? Why defer it? (M. Ruess 4/6/2026)
While it may appear more efficient to complete a project all at once, most public sector capital improvement projects require several phases before construction can begin. These phases typically include project initiation and scoping, pre-design and feasibility analysis, environmental review and permitting, design development, bidding or procurement, and ultimately construction. Each phase also contains multiple supporting tasks such as surveys, engineering, cost estimating, agency coordination, public outreach, environmental compliance, and contract review.

As a result, larger or more complex projects often span multiple fiscal years regardless of whether the construction itself occurs in a single phase. In some cases, projects are intentionally phased to align with available staffing, consultant support, permitting timelines, seasonal construction limitations, or funding availability. While the City always seeks competitive pricing and opportunities to reduce overall project costs through efficient procurement and negotiation, the primary reason for deferring portions of projects is the practical reality that there are limits to how many large-scale projects can be effectively designed, managed, permitted, and constructed at the same time.
6 15. Maybe the City should look at options of selling Flanders Mansion and keeping the land around it before repairing it? (M. Ruess 4/6/2026)
During the Strategic Priorities Planning Session in January, the City Council identified the potential for selling some of its properties but determined that it was not a priority for the current year.

16. I was hearing during the meeting that our "Sales Tax Cap" is 9.25. I'm not questioning the 9.25 number itself - as above yet. But is this really a "cap"....or can it be adjusted (as long as it is on a ballot and passed - just like our Measure C)? (N. Twomey 4/9/2026) The state collects 7.25% for itself and its programs, and then the State says that cities, counties and districts are allowed to add-on up to another 2%. Thus, the "cap" is 9.25% and cities/counties/districts must share the 2%. That being said, the State does give exemptions from this cap, resulting in some jurisdictions having a sales tax rate as high as 10.5%. In Monterey County, TAMC was given just such an exemption, thus the TAMC measure does not count toward the 2%.

17. I thought that the .38% - is/was included in our current 9.25 tax rate as above in current/previous years - when it should be separate and not included in this total. (This tax came from a TAMC under measure X - which may or may not be very relevant). But is this tax still being collected separately? or at all? explain please. (N. Twomey 4/9/2026)
The TAMC 0.375% is still a valid, active tax being collected and remitted to the TAMC program.

18. Is this now reclassified above as "available sales tax of .38%" - really new? or is it that we are simply "claiming it officially" in this forthcoming process? (N. Twomey 4/9/2026) The municipalities in Monterey County have recently come to understand that the TAMC tax is not a part of the 2%, thus the availability of the 0.375% appears to be "new", even though the taxes are old.

19. If we are simply claiming it for the City (instead of other taxing entities) - why is it needed to be on a ballot? (Because as I see it - we wouldn't be increasing our total sales tax.) (N. Twomey 4/9/2026)
It is a new tax for the City; sort of a "C+" as it is the same process and type of tax as Measure C is. It would increase the total tax rate within the City by 0.375% because the TAMC tax is still in place. Our new sales tax rate would increase to 9.625%

20. If we don't, or any viable taxing entity doesn't, claim this .38% officially via any path - would our Sales tax decrease from .38%? (N. Twomey 4/9/2026) As stated above, the tax rate does not go down as all the current measures are still outstanding, including the TAMC 0.375%.
7 21. I’d like to see a detailing of the items listed highlighted in the Operating Expenditure Cuts slide. (Baron, N. Twomey 5/5/2026)
The focus of operating cuts made to achieve the 85/15 goal centers around:
•Slowing down upgrading and modernization projects like digitizing files •Trimming back the tree program to only slightly more than a maintenance-level of effort •Reducing landscaping expenditures
•Scaling back climate action initiatives
•Decreasing holiday event expenditures
•Asking Departments to review all contracts with direction to reduce those contract amounts by 10%
•No new Cost of Living Adjustment (“COLA”) to salaries for Represented and At-Will employees See Exhibit B for more detail of the cut made to the proposed FY 26-27 budget.

22. Are Council Members considered employees? City Council receives a stipend and not salaries. (Dramov 5/5/2026)
Although Council Members are not City employees, they are part of our employee/payroll system.

They are issued a W-2 and eligible for health, dental, vision, and retirement benefits if they choose to participate. This is why the City has included them as part of our employee number count in all of its budget and fiscal reporting as representing five (5) employees.

23. The Vista Lobos Electrical Panel CIP project is listed at $560K in the Recommended Budget Book though we saw yesterday an amount of $295K. Can you clarify the discrepancy? (Buder 5/5/2026)
The City Council approved a not‑to‑exceed amount of $350,000 for the Vista Lobos EV Charging Station Project. As part of this action, the Council awarded a $295,829 contract to GA Technical for the Vista Lobos Electrical Panel Upgrade and EV Charging Stations Project, which is a carryover project from FY 2024–25.

In addition to the contract amount, the project budget also includes:
● $35,000 for the purchase of EV charging equipment
● $65,000 for consultant services, including design work, bid and award support, and construction support
This brings the total project cost to approximately $460,000.

Separately, $100,000 had previously been allocated in the FY 2024–25 Adopted Budget for the Sunset EV North Lot electrical panel upgrade. This amount has been included along with the above in the project total.

24. Can you provide the total interest and investment income the City is earning on our $40M fund balance? Can you outline what those funds are invested in and their respective returns profile and some of the constraints on how the money can be invested? (Buder 5/5/2026)
Footnote 2 of the audited financial statements for the fiscal year ended June 30, 2025 outlines the City’s investment policies and constraints in detail. In general, the City is restricted to investments with a five year maturity of less, with US Treasuries and Bonds at the long end and 8 bankers acceptances, commercial paper and interest bearing accounts at the short end. During the year, the City kept a small portfolio of laddered investments and moved the rest of its available funds into interest bearing accounts while it evaluates its medium and long-term cash flow needs.

At this time, all of the City’s funds are earning returns generally in the range of 3.4% to 4.3%.

25. Was the presentation of an 85/15 budget postponed or was it decided not to pursue the 85/15 budget simultaneously with the 90/10 budget? In prior meetings the expectations I understood the ask was to see a 90/10 and a 85/15 version or at least summary - such that a decision could be made by Council that could understand the impact of the deeper reduction in operational expense. The transparency in this would help understand what "give" in this deeper view. (N. Twomey 5/5/2026) The City carefully reviewed current expenditures and future plans from the bottom up, and has come back with a budget which gives a starting point at 84%. As the 84% base budget is already less than the 85% “alternative”, the decision was made that starting with the one budget would be best. The question before the Council now is to evaluate cuts that have been made to date and whether they should remain in place.

26. Can you explain the 85/15 budget approach? (C. Theis 5/5/2026) It is the policy of the City that no more that 90% of budgeted revenues be spent on operating expenses and at least 10% of budgeted revenues be spent on Capital Outlay Faced with the need to address $100 million of deferred maintenance needs, the City Council asked the City to look for additional savings that might move the City closer to a budget where only 85% of budgeted revenues was spent on operating expenditures. The draft budget being presented shows 84% of revenues budgeted for operating expenses.

27. Do we have the staff capacity to handle the combined carryover and recommended CIP projects ($10M total) for FY26-27? I would like to have a better sense of staff capacity especially within the capital project arena. (C. Theis 5/5/2026) Assuming the City is fully staffed, including the proposed Capital Program Manager position, we believe there is sufficient organizational capacity to manage the combined carryover and recommended FY26–27 Capital Improvement Program projects. However, it is important to recognize that “capacity” within a capital program environment does not necessarily mean that all projects will be designed and constructed within a single fiscal year.

Many public infrastructure projects are multi-year efforts due to their size, complexity, permitting requirements, environmental review, consultant coordination, bidding timelines, utility coordination, seasonal construction limitations, and public outreach needs. As a result, the CIP budget reflects projects that may be in different phases simultaneously, including planning, predesign, environmental review, design, permitting, procurement, or construction. In practice, staff manages a portfolio of projects progressing concurrently through different stages rather than delivering every project to construction completion within the same year.

The CIP budget also reflects the prioritization outlined in the Five Year Plan. Said another way, not all of the projects carried over in the $10 million total are slated to be completed in FY 26-27. 9 28. Should we use the Section 115 Trust funds to pay down the CalPERS unfunded pension liability? (Delves 5/5/2026)
The 115 Trust currently provides several benefits:
- The composition of its investments is designed to move in the opposite direction of the retirement system’s investments in order to potentially offset unexpected losses in the primary retirement investment pool.
- The amounts in the trust are available in times of fiscal crisis at the City so that the City can meet its required annual payments.
- In times of underperformance in the primary retirement pool, the required pension contributions can escalate dramatically. The funds in the 115 Trust can be used to cover those significant and unexpected increases.

The decision on if/when to use the Section 115 Trust dollars must be made by the City Council.

The City will invite the firm responsible for managing the Trust to share more information on its construction and operations with the Community and the City Council.

29. What is the City’s obligation to the State for the Housing Trust? Are we having to commit a payment to this every year? (Delves/Dramov 5/5/2026) Program 2.1.D of the adopted Housing Element (and the current draft amendment in process) requires the establishment of an affordable housing trust fund in an effort to establish a Cityfunded source dedicated to supporting the creation, maintenance, and rehabilitation of affordable units. In other words, the City has committed to establishing the fund. The source of the funding was not committed to within the Housing Element, just the total amount of $1 million. The City has no obligation to commit more than $1 million, and no obligation to pay into the trust on an annual basis. The mechanism for who is eligible and how these funds would be accessed for building affordable housing will be determined through implementation of the program, which will include an ordinance or resolution adopted by the City Council.

30. We're expecting to spend $2.64 M on the ambulance. How much are we projecting in ambulance revenue? What are the prospects for further increasing ambulance revenue? Can the new found Ambulance revenues be restricted to CIP use? (Buder 5/5/2026) Based on historic runs and current pricing, the ambulance is expected to earn approximately $700 thousand on a combination of runs inside and outside of the City. In the current year AMR, the County’s carrier, has agreed to pay an additional $2 thousand for each run outside the City. This adds another $700 thousand to the budget based on the number of runs historically made, resulting in an annual revenue budget of $1.4 million. At the same time, those runs outside the City may be diverted back to AMR as they have taken steps to increase their workforce.

A full picture of the ambulance’s financial performance as it evolves over time will help the City Council to make sound fiscal decisions. At this time the operations have been recently transferred to the City of Monterey and the new out-of-area service agreement with AMR is just starting.

While it is hoped that together the ambulance will be making more runs and will be reimbursed for costs to a greater degree, these changes have yet to be realized and the ambulance will continue to be operating at a deficit.
10 31. Is the $150,000 budgeted for fire fuel mitigation work sufficient to cover all of the projects in the draft Fire Defense Plan, including the work contemplated for Mission Trail Nature Preserve, Pescadero Canyon, and the City's designated evacuation routes? (Buder 5/5/2026)
The FDP had an estimate of $300,000 for fuels work. The proposed $150,000 budget for fire fuel mitigation work is not sufficient to complete all of the projects and recommendations in FY26/27 that are identified in the draft Fire Defense Plan, including work associated with Mission Trail Nature Preserve, Pescadero Canyon, and the City’s designated evacuation routes. However, the funding would allow the City to begin implementing portions of the Plan and address the higherpriority fuel reduction efforts.

It is also important to recognize that the City separately budgets approximately $300,000 annually for contracted tree maintenance work, including pruning and tree removals, which also supports several of the vegetation management and wildfire risk reduction objectives identified in the Fire Defense Plan. When viewed together, these programs collectively contribute toward implementation of the Plan’s goals.

The current funding proposal was developed as a starting point and reflects broader organizational direction to limit increases in operating expenditures where possible. As implementation progresses and priorities are further refined, staff can return to the City Council with additional funding requests or phased implementation strategies if it is determined that more resources are necessary to adequately address the full scope of the Fire Defense Plan.

32. How much is in the budget for each of the following categories: tree planting, tree removal, tree pruning, and stump grinding? Please describe the underlying assumptions used to generate those budget numbers (e.g., we have X number of stumps in town, we plan to grind Y of them this fiscal year, and we assume a cost of $Z for each stump). (Buder 5/5/2026).

The proposed urban forestry budget should be viewed as a targeted, risk-based maintenance program rather than a fully comprehensive citywide maintenance cycle. The current request reflects organizational guidance to reduce operating expenditures while still addressing the City’s highest-priority tree and vegetation management needs. If conditions, emergencies, or Council priorities require additional work during the fiscal year, staff can return to the Council with supplemental funding requests or revised program recommendations.

The proposed budget currently includes approximately $300,000 for contract tree work. Based on recent work history and local contractor pricing, staff estimates that the majority of the contract tree budget will continue to be directed toward structural pruning activities (more thorough than just removing a dead limb), followed by removals, stump grinding, and replanting efforts. See also the tree question below, as it is reflected in these budgeted plans. Current planning assumptions estimate that approximately 60% (roughly $180,000 or 80 to 90 trees) of annual contract expenditures may be directed toward pruning work, approximately 25% ($75,000 or 15 to 20 trees) toward removals, approximately 10% ($30,000 or 50 to 60 stumps) toward stump grinding, and the remaining portion of 5% ($15,000 or 50 to 60 trees) toward replanting and establishment activities. In addition, we have $23,500 for purchasing trees and plants, which staff 11 can plant. However, these percentages are not fixed and may shift significantly during the year depending on operational demands and emergency conditions.

33. What are the final numbers on the 3 year tree catch-up plan? How much did we spend in total and what were the outcomes (number of dead trees removed, number of stumps ground, number of poor condition trees pruned, etc.)? How many dead, poor, and very poor condition trees remain to be addressed? (Buder 5/5/2026) Based on the City’s 2024 inventory, all Dead trees have been removed and Very Poor Trees (VP) sites remain below 60. While pruning for "poor" condition trees was not part of the original budget, we have continued to prioritize the removal of trees that have declined since the last survey.

Stump data currently fluctuates as new removals have occurred post-inventory. Because funding was consolidated across dead tree removal in the catch up plan and general maintenance, providing a more granular cost breakdown for can be attributed specifically to the "catch-up plan" is challenging.

34. Is the $75,000 "animal control vehicle" to be used primarily/solely for animal control? What's wrong with the 2009 animal control vehicle? (Buder 5/5/2026) The proposed $75,000 animal control vehicle replacement is intended primarily for animal control operations and related field response activities. The vehicle supports daily operational needs such as responding to animal-related calls for service, transporting equipment and animals when necessary, patrol and enforcement activities, and coordination with public safety and community service functions. Depending on operational needs, the vehicle may also occasionally support other related functions, but its primary intended use is for animal control services.

The existing animal control vehicle is a 2009 model and has reached the point where age, reliability, maintenance costs, and operational limitations are becoming increasing concerns. As vehicles age, the City experiences more frequent repairs, higher maintenance expenditures, increased downtime, reduced parts availability, and decreased reliability for daily field operations.

In addition, older vehicles may no longer meet current operational, safety, or efficiency standards expected for field response vehicles.

The replacement request is intended to proactively maintain dependable service levels, reduce long-term maintenance risks, and avoid the operational impacts associated with retaining an aging vehicle beyond its practical service life. The estimated budget also reflects current vehicle market conditions, outfitting requirements, and the specialized equipment often necessary for animal control and field response operations. That being said, the city will and does carefully consider the need against the cost before executing the capital plan.

35. The CIP budget includes $275k for design work for sidewalks, with actual construction occurring in the next fiscal year. Can you give us a rough estimate of how many linear feet of sidewalk is estimated to be replaced in this project over the two fiscal years? (Buder 5/5/2026)
An estimated 3,000 linear feet of sidewalk is included in the project cost calculation. However, the actual pricing will depend on the bids received when the project is formally bid and awarded, so the current figure remains an estimate and may change. In addition, street conditions vary by 12 location, which can further affect pricing once prospective contractors evaluate the actual field conditions.

36. $2.4M Sand Ramp – Eighth Avenue Repair CIP: Why are we choosing not to follow the Integral Consulting December 2025 Carmel Adaptation Pathways report for this project? Integral's immediate recommendation is for regrading the ramp at the current location, protecting it against potential future erosion with sand redistribution, and monitoring triggers BEFORE moving to the 2045-2060 strategy. This immediate strategy can be handled out of operating expenses. The $2.4M draft budget book CIP looks to be Integral's 2045- 2060 1-ft SLR redesign and move strategy. (S. Lonergan 5/6/2026) Integral Consulting’s role is focused on climate change resiliency guidance, but they are not an engineering firm. While we continue coordinating with them, the actual design of the sand ramp must be completed by a licensed engineering firm, as required for shoreline infrastructure projects.

Regarding the sand redistribution, that activity is considered maintenance and operations work related to climate change adaptation and will likely be incorporated into the ongoing maintenance plan for the sand ramp rather than treated as a standalone design task.

Integral’s work is to review technical designs to ensure they align with the climate change adaptation program currently under development.

37. There has been a significant effort to remove dead/dying trees and remove totem poles (as possible) and stumps - on a 3 year plan. What does this item do to this prior plan? And/or I understand that PG&E has a very aggressive removal/trimming plan as well.

How do both of these come together or not? (N. Twomey 5/6/2026) The City has finished the work identified in the 3-Year Plan. That being said, there is always more work to do.

The City’s plans rarely intersect with those of PG&E, except for dead tree removals. However, their pruning isn’t designed for tree health; it typically results in "totem poles" that leave us with more wood to collect and manage.

38. Digitizing files - directly impacts the productivity of all property owners and our planning staff. Is there an impact here....or are the files that remain not in high demand? (N. Twomey 5/6/2026)
There is a small impact, but that was considered when balancing the organizational guidance to reduce operating costs. There will still be some progress on scanning and digitizing, but it will just take two fiscal years to complete the project rather than one. The majority of files remaining to be scanned are documents such as resolutions, contracts, ordinance, etc. There are also old construction plans on the list to be scanned as well. Both of these categories of documents are important, but are not in high demand.
13 39. In the initial draft of the Budget Book....this includes the 84/16 operations/capital spending as the assumption.
● Is it fair to assume that if and when the incremental revenue comes in from these new initiatives - that the general guidance is to guide these dollars to more of our Capital Projects backlog?
● With any new/incremental funds guided to Capital Projects - can we manage them effectively - especially considering the 2 incremental Project Manager/Engineers and replacement Director of Public Works? (N. Twomey 5/6/2026)
The Council may choose by adopting a budget policy to directly allocate new revenue sources to Capital Projects. This decision has not been made yet.

Assuming the Project Management team in Public Works is fully staffed, including the proposed Capital Program Manager position, we believe there is sufficient organizational capacity to manage a larger Capital Improvement Program.

40. One of the areas I'm interested in learning more about are the strategies and scope of contract reductions by 10%.
○ Is current contracting centralized by the enterprise or decentralized by department(A)?
○ If it's decentralized are there standard contract templates being used (B)? ○ For this initiative, approximately how many contracts are in play and what is the current annual spend on these (C)?
○ What is the target range of annual savings (D)?
○ Can you adjust service levels or scope to reduce cost without materially impacting outcomes (E)?
i. If not, what service level impacts, if any, are anticipated? ○ What are your strategies (E)?
i. For example, are there incumbent suppliers with favorable terms that could be renegotiated, should you consider competitive bidding, or might it be a combination of both?
○ Are there opportunities to eliminate redundant or duplicate contracts, consolidate vendors, or standardize terms (E)?
○ What resources (team, tools, external advisors) are required, and what is the estimated effort and time to implement (E)? (T. Twomey 5/6/2026) A. Each department is responsible for managing their own contracts once they are in place, which would include renegotiation and searching for new vendors. The processing of contracts however, including invoicing, is centralized through City Administrative Services.

B. The City uses a standard contract template for services and standardized guidelines for CIP.

C. There are a great diversity of contracts in place. See Exhibit A.

D. While a target of a 10% reduction on contracts in total, the true savings to be achieved will come through evaluation of each individual contract’s terms and services provided.

E. The goal of this initiative is to reduce contract costs and not materially impact outcomes or service levels. There will be a combination of strategies used for this effort. With the number of contracts in place, the primary strategy will be to seek opportunities to negotiate terms. Departments will also be looking at things like possible redundancies of service 14 providers, ways to consolidate services to realize savings, and services that are not currently being utilized. The City believes there are opportunities to eliminate redundant or duplicate contracts, consolidate vendors, or standardize terms.

42. What amount is in the operating budget for watering trees? What is proposed to be done by City staff vs. contractors? Does the City Forester believe that this amount is sufficient to water all newly planted and otherwise vulnerable City trees on a best practices schedule? Recognizing some level of seasonality, what is that approximate schedule (i.e., how many times per week in the wet season vs. dry season)? (Buder 5/8/2026)
There is currently no specific funding allocated for tree watering, as these duties have been absorbed by our sole landscape maintenance worker. In addition to watering, staff manages staking, planting, and irrigation repairs.

43. What is in the budget on CIP projects for quality control? Historically, who has been responsible for overseeing quality control on CIP projects? In other words, who checks on the work to approve final payment? What arrangements are contemplated for FY 2026-2027? (Buder 5/8/2026)
Public Works staff provides project oversight to ensure compliance with all plans and specifications. This includes conducting regular field meetings and oversight during construction.

The City does employ a consulting Construction Manager (CM) from time to time as need arises to handle daily on-site construction operation management and quality control in the field. The CM is also responsible for monthly quantity take-offs and quality verification prior to authorizing progress payments. Due to a current lack of dedicated inspection staff and limited internal capacity, we recommend continuing the use of a consulting CM or Inspector to maintain these essential oversight duties. The City plans to increase these inspection activities in the FY26/27 CIP in order to support a higher level of quality assurance when projects are completed.

44. Do the City's CIP contracts for things like painting, paving, etc. include a retainage provision? (Buder 5/8/2026)
Public Works CIP contracts include a retainage provision.

45. $3.5M Police Station / Public Works (PS/PW) Design CIP: Is it the case, or would it be best, that the $3.5M in PS/PW design funding only be committed AFTER we have clear line of sight that we are structured to achieve our housing element's commitments as will be reviewed as part of the 2027 Mid-Cycle Review?
If we commit $3.5M on a single-use design project, we may lose flexibility to consider this site's highest and best use. For example, the combined Vista Lobos and PS/PW facility location may be a prime candidate location for a public-private-partnership (PPP) project that delivers a new PS/PW facility, parking, and low income housing.

There is evidence that properly structured PPPs implemented through a competitive Request for Proposal (RFP) process can reduce municipal financial risk for large city development projects compared to traditional "in-house" design-bid-build methods.

Please retain this option until we have a clear line of sight that we are structured to meet our housing element commitments. (S. Lonergan 5/8/2026) 15 The design of the police station / public works building has been listed as a current project so that the City can get the help of professionals to identify ideas and consensus. This opinion will be considered in that process.

46. The annual cost difference for Carmel to fund CalPERS benefits versus what private sector employers contribute in Social Security payroll taxes is presently about $4 Million per year. That alone represents over 10% of Carmel's annual revenue. That includes:

1. 6.9% interest Carmel pays on our $29+ Million UAL ($2+ Million)

2. the $1 Million Section 115 Contribution, which seems to be terminating after FY26 in favor of a $1 Million Carmel subsidy for affordable housing

3. the difference between CalPERS employer payroll tax contributions versus what private sector employers pay in social security payroll contributions

4. annual OPEB contributions
Over ten years that is $40 Million, which could fund a new Police Station.

CalPERS Pension costs and benefits are said to be on average 4 times greater than the social security benefits that private sector employee retirees receive. That is grossly unfair to us private sector employees and retirees who in fact fund most of the those CalPERS Pensions and OPEB via our property taxes, sales taxes and TOT.

Three related Questions:

1. The $1 Million contributions to the Section 115 Trust (total $5 Million) and now for Affordable Housing are being paid by restricting prior years' accumulated net reserves. Why are those Section 115 contributions not by being funded via the current years' operating costs?

2. Carmel appears to have $40+ Million in cash and investments on our Balance Sheet.

Why not pay off the $29 Million UAL and save the 6.9% interest? It appears that the interest/investment income being earned on the $40+ Million is significantly less than the 6.9% Carmel is paying on the UAL loan from CalPERS.

3. What is being done to address the cost of CalPERS Pensions and OPEB, and the disparity that exists between Government Employees and Private Sector Employees? Why can't the CalPERS Plan be terminated and replaced by Social Security? (D.Quinnert 5/9/26)
The Section 115 Trust and assignment to a Housing Fund are not expenses, but the City and Council could choose to spend less on Operating Expenditures and Capital Outlays in order to have more fund balance available to fund these set-asides.

While cash could be used to pay down pension debt, it would then not be available to pay for deferred maintenance. In addition, the 6.9% “interest rate” on the pension liability is actually the current base rate of return or crediting rate calculated by the pension, but the investments in the pension pool are earning a return that is greater than 6.9%.

Significant pension reforms were put into place, resulting in current benefits which are not accruing unfunded liabilities. Additional reforms could be considered but the City would still be liable for all benefits earned to date.
16 47. I have asked the following questions in writing via email for the past ten years to the broader City Council for which I have not had the courtesy of a response. a. Why does it take 9+ months every year to release the prior years' Audit Report? The largest publicly held corporations in the world release their numbers to shareholders well within 60 days after the close of their fiscal year. It is very challenging to properly manage a business when audited financial statements are not available for so many months.
b. Why are quarterly budget updates not provided to residents? Without this information, Residents cannot exercise oversight over the financial management of our City.(D.Quinnert 5/9/26)
The audit begins before the fiscal year has ended, but certain grants, taxes and other accruals require time after the end of the fiscal year to be quantified and recorded. That being said, nine+ months is not the time frame in which the report should be released. The City will be working closely with its external audit team to encourage a more rapid release of the audit.

Most cities utilize a mid-year budget review process. This year the City moved to a tri-annual review, giving the public its first look at operations sooner and giving a second look in time to adjust as needed. In addition, the City is working on ways to provide ongoing reporting that will enhance Fiscal Transparency.

48. Another area where I have been asking questions, albeit without response, over the past 11 years is in regard to transparency. I am not at all suggesting any underlying concerns or other motivation, just simply more and better data that would aid in financial oversight.

That said, my questions are as follows:
a. There is no detail associated with Other Income, which is a significant amount estimated to be nearly $5 Million. Apparently that broadly includes: Various Fees and Licenses, Ambulance Income, and Interest and Investment Income. I am particularly interested in the amount of interest and investment income relating to the $40+ Million in cash and investments noted on the Balance Sheet. Also, can that detail routinely be provided going forward?
b. How much does the City invest in the Sunset Center annually? I know it minimally includes $750K in cash, but probably includes some Public Works staffing and some out-of-pocket maintenance expenses.
c. CalPERS Pension and OPEB Costs are the big issue for me. Those costs include the loan interest, Section 115 Trust, employer payroll tax contributions, and OPEB contributions. Some of them are separately noted in the Financial Notes of the ACFR, but can those costs be summarized together someplace in the ACFR so that the uninformed reader can see the extent of those costs included in the City Budget? d. Carmel Cares is providing and contributing services to the City which are very important to our community and beyond invaluable. In fact, those services relieve the City of the cost of providing those services in the annual operating budget. How much does the City save annually because Carmel Cares is providing those services free of cost?
17 I would appreciate if these questions are included in the Budget Workshop Meeting on May 12.(D.Quinnert 5/10/26)
a. Page 15 of the budget book outlines the major categories of Other Income. Once the budget is finalized, the end of the book will have the accounts in detail, as can be seen in the FY 25-26 budget book (page 96 last year). As mentioned in the various Q&A answers above, the City is generally being much more aggressive in its Other Income assumptions. b. In addition to the annual contribution of $750 thousand per year, the City has a number of CIP projects in and around the Sunset Center. The City does not track facilities management time by location, but its staff do work with the Sunset Center’s facilities staff. c. Although the form and content of the ACFR are uniformly structured across all cities, we will work with the auditors who issue the ACFR to see what can be done. d. The City makes an annual disclosure of the donations received from Carmel Cares including their time. The last declaration (provided by Carmel Cares in June of 2025) noted $252,097 of value provided and 8,576 hours of volunteer service.

50. Budget Policy: Although it is commendable that the City staff has been able to look at ways to lower Operational Expenditures to 84% of the Revenues, it is not clear what each source of those reductions is. Please explain the specific items. If the intent is to go forward with a policy of 85 / 15 vs the current 90/10 policy, my recommendation is to establish the budget with 15% of Revenue for Capital Outlay Expenditures. The proposed budget shows 22% of Revenue at $ 8,503,680 which does not seem like a realistic allocation. Why not set up a target of 15% of Revenue at $5,857,911 for Capital Outlay Expenditures?(M. Rengifo-Ruess 5/9/26)
See the discussion of current year budget cuts, the discussion of the $9 - 10 million annual CIP Plan and the discussion of decreasing available fund balance in the previous Q&A above. The City Council must determine their priorities and fund them with the resources that are available or could be available.

51. Expenditures: A significant work at reaching an 84% of the Revenue, but it is unclear how that level was achieved. Please provide details of what was reduced, by how much and with what impact to the operations.

Additionally, seems some expenses have been identified yet no detail has been provided. Please provide some information regarding:
a. $1.2 Million for support for the operations of the Sunset Center and other economic development activities
b. Pension expenses total $3 million, or 7%, of the budget and only include the annual required unfunded pension liability premium (M. RengifoRuess 5/9/26) See detail of suggested cuts discussed in Q&A above. The detail of $1.2 million of Economic Development is included in the budget book at page 33. The largest expenditure is that of the sunset center contribution, followed closely by SeeMonterey. The $3 million pension expense in the budget is this year's required minimum contribution to continue paying down the unfunded liability related to past pension grants. 18 52. Revenues: It is clear what our three big sources of revenue are: TOT, Sales & Use Tax, and Property Tax. I think it is an imperative for the City to find ways to increase both TOT and Sales & Use Tax for the following fiscal year. My question is: what tools are we using to estimate the growth? They seem very conservative. Also, in the category of Other representing a 13% of the Budgeted Revenues we describe that it includes Interests and Investment Earnings. Please provide the details what those are. How is the city investing? What Interest is the city generating? etc.(M. Rengifo-Ruess 5/9/26) The City is looking at housing price indicators and trends and talking with industry experts.

While the assumptions appear to be conservative, they are more aggressive than other cities in the state are using. At the same time, these revenue sources are very volatile and some level of caution is sound fiscal practice. See above discussions regarding Other Income (including Ambulance) and Investment Income.

53. Capital Improvement Plan: Not clear how an increase to $8,503,680 in the Capital Improvement Plan is going to be implemented. Questions:
a. Does the City have the required staff to implement all the items listed? b. Can the City use all the allocated budget within the Fiscal year 2026/2027?(M.

Rengifo-Ruess 5/9/26)
The City is proposing to increase the project management staffing to a level that is three times that of the current year. As discussed in the previous Five Year Forecast and CIP workshop, the $8.5 million budget is based on a plan that the City has for the specific projects that can be completed in the coming year.

54. Unassigned General Fund Balance: The current unassigned fund balance is approximately $18 million at the end of FY 25-26. Contributions to the 115 Pension Trust are reflected as a restriction of unassigned fund balance. After five years of contributions to the 115 Unfunded Pension Liability Trust, the City is proposing that the $1 million that had in the past been contributed to the trust instead be Committed by the City Council to a Housing Trust. Please explain:
a. What is the Housing Trust? How long is the City going to allocate the $1M? Is this a recurring funding item or a one time?
b. Why stop the contributions to the 115 Pension Trust? This is a liability that would be best managed if reduced or eliminated. (M. Rengifo-Ruess 5/9/26) The concept of the Housing Trust originates in the City’s Housing Element. Please see Question 29 above.

The Unfunded Pension Liability still has a number of years of expected payments before it is paid down. The 115 Trust continues to be a vital tool in the management of that liability and its fluctuations, but in the spirit of trying to make as many resources available to CIP as possible, it was suggested that a further reserve of fund balance be put on hold. 19 55. Other sources of Revenue
I recommend we as a community, with the support of our businesses and residents, continue to look at other sources of revenue such as:

Increase in TOT
Increase in Sales & Use Tax
Establish Pay Parking
Consider a Vacancy tax on empty homes (or similar mechanism) (M. Rengifo-Ruess 5/9/26)
With deferred maintenance of $100 million and a forecast Capital Outlay Five Year Plan of $9 - $10 million per year, the City will need to look for resources along with spending cuts.

56. At the end of the Proposed Budget, the “fund” accounting structure is mentioned. What are the 2025-2026 year end balances for all of the funds mentioned on pages 69-71, and what would the anticipated 2026-2027 year end balances be under the proposed budget? (Baron 5/9/2026)
See previous #2 and #3 Q&A response regarding fund balance and the reduction in fund balance as the City continues to spend more than it receives.

57. There is a new position called a “Capital Program Manager” with a salary range of $153, 845 to $187,000 per year. What is the salary range of the project manager position? What is the salary range of the Public Works department head? (Baron 5/9/2026) The current project manager salary range is $130,456.28 - $158,546.00 The new CIP Manager’s salary range is $153,845 - $ 187,000 The public works directors salary range is $197,417.61 - $239,962.63 The salary range for the new CIP Manager was determined by market median for municipal engineer type classifications, which traditionally oversee CIP programs. This is also in line with Council’s long standing compensation philosophy of market median.

58. Where are we in the forest [rehabilitation/replanting/maintenance] program, and how specifically will this forest management effort be affected by these cuts?(Baron 5/9/2026) See previous Q&A response outlining the fact that the Three Year Catchup plan has been completed, leaving the City in a stronger position to continue maintenance efforts. 20 EXHIBIT A - List of Primary Contract Service Providers Vendor Description
Regional Government Services Payroll services
Civitas Advisors Consulting services
Universal Staffing Inc Temporary staffing services
Pace Productivity Inc Municipal Cost of Services Study
Monterey Bay Engineers, Inc Profession fees: ALTA/SDPS Survey Dolores/Carmel River Municipal Resource Group, LLC Executive coaching services Netfile, Inc Netfile
Regional Government Services Payroll Services
GovInvest Inc GASB, Financial Forecast, Pension/OPEB
Hinderliter, De Llamas & Associates Sales Tax Contract Services Prime Actuarial Consulting LLC/Bickmore Actuarial study Yuval Miller Professional services: LIUNA hearing
Department of General Services Moulton hearing
Flaherty's Seafood Grill IT Training - lunch 45 people
IAMP Pro Audio/Anthony J. Nocita Set-up, live production, associated support of city meetings and
Cogix Corporation Online payment portal
Digital Deployment Website Support Agreement
Sloan Sakai Yeung & Wong Legal services
Burke,Williams & Sorensen, LLP Legal services: City Attorney Kennedy, Archer & Giffen Legal costs
Mad Dogs & Englishmen CP&B Bike Maintenance
EMC Planning Group, Inc 6th Cycle Housing Element
Veronica Tam and Associates Sites Inventory and Programs 4Leaf, Inc Permit Technician 08-04-25 - 08-08-25
Engineered Fire Systems Engineered Fire Systems Review
Avenu Insights & Analytics, LLC POP: 7/12/24-7/11/25
Total Industries Pacheco Batteries for Electric Vehicle - Code Enforcement Share Granicus, Inc. FY26 Short Term Rental Monitoring
Uretsky Security background investigations
Carmel Towing & Garage Towing services PD
Community Hospital of the Monterey
Peninsula
PD Testing services
Department of Justice/Accounting Office Police Dept Fingerprinting services AT&T PD Phone Tracking
Wilana, LLC dba Swift Car Wash Car Wash
T2 Systems, Inc Parking and Citation services
Chaplin and Hill Investigative Investigative services
Thomas Uretsky Professional security consulting as directed by Police Dept Cooke & Associates, Inc. PD Background Check
ComSonics Repair Services Autovu Maintenance contract
Lexipol LLC Lexipol manual/DTB annual fee
Monterey County Animal Services Animal control services Monterey County Sheriff-Coroner MCSO Jail bookings
County of Monterey, Dept of Emerg
Management
Alert & Warning, Dispatch
Monterey County District
Attorney/Accounting
Blood Alcohol Costs
Monterey County Health Department CBS-PD Retainer Fee
21 Same Day Shred PD-Document shredding services
T2 Systems Canada Inc. Digital Iris Service PD
Transunion Risk & Alterna TLO investigative searches
Tracnet Corporation IBM Service Hardware/Software renewal Verizon Wireless Cell phone sales and usage
City Of Monterey Fire Services
First Alarm Alarm services
Mission Linen Service Laundry service
County of Monterey, Dept of Emerg
Management
Mty Count Emergency Communications Dispatch
Dr. James Stubblefield, MD, Inc Medical Director services Altius Medical Medical/biohazard waste disposal
City Of Monterey Ambulance Administration
LogRx Controlled Substance Subscription 1-5 Units
Mission Linen Service Mission Linen (updated contract)
Verizon Wireless Verizon Wireless
Wittman Enterprises, LLC Ambulance billing services
Cintas Corporation Uniform Services
Robert Half Temporary staff for Forestry permit tech
Cintas Corp 2 (First Aid) First Aid station stocking
Anthony Enea Sidewalk cleaning
Precision Emprise LLC Sidewalk Assessment 10/14/25 #56205 David Sollid Marina Backflow Company FM Backflow services Ailing House Pest Control Ailing House - City wide pest control Airtec Inc Airtec - Routine Service
Otis Elevatior Company elevator service at HML
California Fire Protection, Inc. Fire extinguisher service California Premier Restoration California Premier Restoration, Inc. - Work at City facilities Cate Electrical Co., Inc. SSC parking lot, electrical light post repair. 11/26/25 #49935 West Coast Door & Gates Service call and Edge Replacement 1/27/26 #6499 On Point Generators City Generator service
Wm Baxter Electric City electrical work
Brian Steckler Council Chambers A/V Project
Golden State Portables Golden State Portables - Portable potty service Macaluso Electric, Inc. FT emergency electrical services Department of Industrial Relations Conveyance fee
Carmel Door Company Replacement of window unit 1 on south side of City Hall M3 Environmental Consulting Lead - Asbestos inspection different City locations Overhead Door Co of Salinas Overhead Door Co - City Garage door service Poes Plumbing & Backflow Poes Plumbing & Backflow - City facility plumbing service Pureserve Building Service FM Janitorial services Citywide Sentry Alarm Systems City facility alarm service
Toro Petroleum Fuel for generator PD/PW
Wald, Ruhnke & Dost Architects, LLP Professional services Fire Dept Engine Bay expansion Carmel Area Wastewater District Cleaning storm drains
Applied Marine Sciences ASBS Watershed Monitoring
Denise Duffy & Associates ND Habitat Resource Monitoring Dudek Environmental support: On call MTNP, Carmel Forest Mast Plan, CE
Jamestown Advanced Products Corp Ribbon can replacement parts HF&H Consultants, LLC Virtual Council presentation2nd Nature Software Inc Signature Software -street sweeper route Ace Organics dba Th Bin King Steam clean 30 trash enclosures Monterey One Water Monterey One Water
22 Monterey Regional Waste Management
District
Monterey Regional Waste Management District
Native Solutions North Dunes Volunteer Management (Native Solutions) PSTS, Inc. Pumping oil-water separator
State Water Resources Control Board
(SWRCB)
Annual Storm Water Permit fee
California Marine Sanctuary Foundation E.9.C Water Quality Monitoring Community Tree Service Tree work as directed by City Forester Nicole Nedeff Forest Management Plan
Tope's Tree Service Inc. Tree services citywide as directed by City Forester West Coast Arborists Inc . Tree maintenance services as directed by City Forester Town and Country Gardening Tree work in the City
Pacific Grove Self Storage Storage Unit - Document storage Joe Shabram City art restoration
The Christmas Light Pros Holiday lights
Kelly Productions Santa for holiday celebration 12.5.2025 Glastonbury Inc Sound for Community Activities
Good Roots Events, Inc. Thursday farmers' market and Third Thursday events Hear & Now Monterey, LLC Sound & lighting for Community Activities Bliss Point Productions Stage rental
National Parking & Valet Shuttle-parking services Car Week 23 EXHIBIT B - Detail of Expenditure Cuts included in the draft FY26-27 Budget

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