1. Suggested Workshop Outcomes
Confirm that the FY 2026-27 Proposed Budget reflects City Council priorities and the March 2026 budget goals.
Review updated General Fund revenues, expenditures, reserves, and fund balance projections.
Discuss major cost drivers, including labor, benefits, CalPERS, insurance, public safety technology, and internal service allocations.
Review the use of one-time resources, including ARPA revenue replacement/government services funding.
Discuss long-term forecast warning signs and strategies to grow the tax base and control ongoing costs.
Provide direction on any final changes before the public hearing and budget adoption.
2. Proposed Workshop Agenda
Time
Topic
Purpose / Discussion Focus
20 min
Opening Remarks & Overview
City Manager overview: budget momentum, fiscal discipline, community challenges, and need to remain nimble and prudent.
Review total proposed budget, General Fund summary, mayor revenues, expenses and budget goals. 20 min
General Fund Revenue and Expenditure Discussion
Discuss revenue assumptions, TOT/Visit Fort Bragg reinvestment, reimbursements, other taxes, expenditure by function, and cost pressures. 40 min
Department Highlights
Review key department narratives: City Council, Administration, Non-Departmental, Police, Fire, Public Works, Community Development, Economic Development, VFB, and CV Starr. 25 min
CIP
Review Water, Wastewater, CV Starr, MCN/Broadband, and FY 2026-27 capital priorities. 15 min
Long-Term Forecast
Discuss projected out-year deficits, reserve protection, tax-base growth, and structural budget pressures. 30 min
Council Direction
Confirm assumptions, provide adjustments, identify follow-up items, and prepare for adoption.
3. Budget Snapshot
Budget Item
Amount / Direction
Total Proposed Operating and Capital Budget
$83.3 million
FY 2026-27 General Fund Revenues
$17,233,974
FY 2026-27 General Fund Expenditures
$17,228,509
Projected General Fund Surplus
$5,465
Beginning General Fund Balance
$9,053,459
Projected Ending General Fund Balance
$9,058,924
FY 2026-27 Capital Improvement Program
Approximately $20.0 million
Five-Year Capital Improvement Program
Approximately $123.4 million
One-Time ARPA Revenue Replacement /
$400,000
Key Budget Themes for Council Discussion
Balanced, but narrow: The budget is balanced, but the surplus is only $5,465 on a $17.2 million General Fund budget.
Rising fixed costs: Labor, benefits, CalPERS, insurance, utilities, public safety technology, internal service allocations, and contracted services are increasing faster than many ongoing revenues.
Need to grow the tax base: The closure of Rite Aid, formerly one of the City’s top sales tax-generating businesses, demonstrates why economic development, business retention, tourism reinvestment, broadband, housing, and redevelopment are essential.
Tourism reinvestment: The budget continues investment in Visit Fort Bragg, destination marketing, events, and shoulder-season tourism to support TOT, local businesses, and year-round economic activity.
Infrastructure and maintenance: The budget includes investment in streets, sidewalks, storm drains, facilities, parks, water, wastewater, and broadband infrastructure.
One-time resources: The proposed budget includes $400,000 in previously obligated ARPA revenue replacement/government services funding, which should not be treated as ongoing revenue.
Long-term warning signs: The five-year forecast shows annual operating deficits beginning in FY 2027-28 if current trends continue.
City Council Budget Goals from March 2026
At the March 2026 Mid-Year Budget Workshop, the City Council established budget goals to guide the FY 2026-27 budget development process. The proposed budget is structured to accomplish these goals while recognizing that the operating margin remains narrow.
Adopt a balanced budget: The General Fund is balanced with a projected surplus of $5,465.
Maintain current service levels: The budget avoids staff layoffs and major program reductions while preserving core municipal services.
Protect reserves: The budget maintains operating reserves, recession/emergency reserves, and a stable fund balance.
Support the workforce: The budget includes negotiated cost-of-living adjustments and maintains staffing capacity in priority service areas.
Maintain long-term fiscal discipline: The budget uses one-time resources carefully and recognizes that structural pressure remains in the long-term forecast.
Continue pension stabilization: No direct Section 115 Pension Trust contribution is budgeted due to the narrow surplus; however, the City’s policy to contribute 50% of year-end General Fund surplus remains an important long-term tool.
General Fund Revenue Discussion
Key Revenue Areas
Sales and Use Tax: Measure T has strengthened the revenue base, but the City should continue using cautious assumptions and focus on business retention and attraction.
Transient Occupancy Tax: TOT is budgeted at $3,564,926. The budget reinvests tourism revenue into Visit Fort Bragg, destination marketing, events, fireworks, and shoulder-season activation.
Property Tax: A stable revenue source, budgeted at $1,309,219, with growth tied to assessed value, transfers, and limited new development.
Other Taxes: Includes business license tax and franchise revenues from PG&E, C&S Waste, and cable television. Cable franchise fees are expected to continue declining due to streaming and consumer behavior changes.
Reimbursements: Budgeted at $5,976,649, including updated cost allocation reimbursements, grant staff time, SRO reimbursements, CDBG, CRU/Prop 47, Youth Opioid Response, BEVRI, Sea Grant, and coastal resiliency work.
Grant Revenue: Important, but often restricted and reimbursement-based. Grants reduce local burden but should not replace ongoing General Fund revenue.
Council Discussion Questions
Are the revenue assumptions appropriately conservative given economic uncertainty? Does Council support the continued reinvestment of TOT funds into Visit Fort Bragg, events, and destination marketing? What additional actions should the City prioritize to grow and diversify the tax base? Are there revenue areas Council wants staff to monitor more closely during the mid-year review?
4. General Fund Expenditure Discussion
Expenditures by Function
Budget Item
Amount / Direction
General Government
Approx. $5.3 million: City Council, Administration, Finance, Legal, Non-Departmental, Visit Fort Bragg, and organization-wide obligations.
Public Safety
Approx. $6.9 million: Police Department, Care Response Unit, Fire allocation, SRO, Task Force Officer, dispatch, technology, and emergency preparedness.
Public Works
Approx. $3.2-$3.3 million: Streets, Engineering, Storm Drains, Parks, Facilities, and Corporation Yard operations.
Community Development
Planning, permitting, housing, grants, economic development coordination, code compliance, and development review.
Major Cost Drivers
5% cost-of-living adjustment and step increases for employees.
Higher medical, dental, workers’ compensation, retiree medical, and CalPERS costs.
CIRA liability and workers’ compensation premium increases.
Public safety technology, including RIMS report writing/AI, body-worn cameras, Tasers, Flock, and ALPR.
Dispatch costs through the City of Ukiah and animal control contract costs.
Internal service allocations for IT, facilities, fleet, administration, and shared support.
New and restored capacity, including CDD Director, CSO, Public Experience Liaison, Recreation Coordinator, and Maintenance Worker II.
Discussion Questions
Are there expenditure areas Council wants staff to review further before adoption? Does Council support maintaining current service levels despite narrow operating margins? Are there any one-time expenditures Council wants to defer, accelerate, or reprioritize? What cost containment strategies should staff evaluate before the mid-year review?
5. Department Highlights for Workshop Discussion
Department / Area
Key Discussion Points
City Council
Stipend increase beginning December 2026; election costs of $40,000; training/travel for Cal Cities and Redwood Empire; Council goals are reflected throughout the overall budget even though a separate goals budget was not included.
Administration
Includes City Manager, City Clerk, HR, Administration, and City Attorney. Higher costs reflect staffing, benefits, legal costs, compliance, risk mitigation, and internal service allocations. City Attorney budget is reduced from elevated FY 2025-26 estimated costs.
Non-Departmental
Approx. $1.3 million for citywide obligations, including $640,000 in liability premiums, $365,000 retiree medical, and $20,000 emergency planning. No direct Section 115 contribution is budgeted.
Police Department
Largest General Fund service area $6.6 million. Includes 9 officers, 1 CSO, PT Transport Officer, 3 Sergeants, 2 Commanders, Chief, Task Force Officer, and SRO with 70% reimbursement from FBUSD. Focus on recruitment, overtime reduction, training, and technology.
Fire Department
Approx. $496,158 allocation based on Fire Department budget and service-call ratio inside City limits. Council will consider a November 2026 parcel tax measure for fire engine funding.
Public Works
Approx. $3.3 million. Adds Maintenance Worker II for streets capacity. Janitorial and landscaping outsourcing frees staff for higher-priority maintenance. Software/asset management improvements are being developed.
Community Development
Approx. $1.31 million. New CDD Director begins in July. Added internal capacity should reduce reliance on outside contract planning and support permitting, housing, code compliance, and DDA work.
Economic Development
Approx. $440,924. Two employees: ED Manager and Grants Analyst, largely grant-supported. Focus on BEAR Strategy, business support, grants, downtown revitalization, blue economy, and tax-base growth.
Visit Fort Bragg
$355,000 for tourism marketing and promotion, including $120,000 for events and $35,000 for fireworks. Focus on shoulder-season tourism, downtown activation, and destination marketing.
CV Starr
Approx. $2.9 million. Revenues expected to recover after pool closure. Recreation Coordinator supports youth, programs, Bainbridge Park, and broader parks/recreation goals. Fee schedule and financial sustainability study completed.
6. Capital Improvement Program
Water Enterprise Fund: FY 2026-27 expenditures are approximately $15.1 million, with major capital outlay and continued focus on long-term water reliability. A water rate study was completed in FY 2025-26; the prior rate study was from 2014.
Wastewater Enterprise Fund: Continues to focus on regulatory compliance, system maintenance, capital reinvestment, and long-term operational sustainability.
CV Starr Enterprise Fund: Transitioning from major capital projects to operational sustainability, program development, and revenue recovery after pool closure.
MCN / Broadband Enterprise Fund: Forecast shows transition from construction/customer activation to potential positive long-term operating position, dependent on subscriber growth and cost control.
Capital Improvement Program: FY 2026-27 CIP totals approximately $20.0 million, focused on water, streets, municipal facilities, wastewater, stormwater, broadband, safety, and public infrastructure.
Discussion Questions
Are there any capital projects Council wants to elevate or defer? Does Council support the current focus on water reliability, streets, sidewalks, broadband, and facility needs?
7. Long-Term General Fund Forecast
The five-year forecast shows that the City is financially stable today, but warning signs remain. The FY 2026-27 Budget is balanced and projects an ending fund balance of approximately $9.06 million. However, annual operating deficits are projected beginning in FY 2027-28 if ongoing expenditures continue to grow faster than ongoing revenues.
Category
FY26-27
FY27-28
FY28-29
FY29-30
FY30-31
Total Revenues
$17.23M
$17.42M
$18.03M
$18.65M
$19.30M
Total Expenditures
$17.23M
$17.85M
$18.49M
$19.16M
$19.86M
Net Increase / (Decrease)
$0.01M
($0.43M)
($0.46M)
($0.51M)
($0.56M)
Ending Fund Balance
$9.06M
$8.63M
$8.17M
$7.66M
$7.11M
Forecast Warning Signs
Ongoing expenditures are projected to grow faster than ongoing revenues.
Benefit costs, CalPERS, insurance, and internal service allocations continue to rise.
One-time resources cannot be relied upon for ongoing operations.
Tourism and sales tax revenues remain sensitive to broader economic conditions.
The City must grow the tax base through economic development, business retention and attraction, Visit Fort Bragg, downtown revitalization, housing, broadband, and redevelopment opportunities.
8. Council Direction Questions
Does Council support the FY 2026-27 budget assumptions as presented? Does Council want to make any changes to General Fund revenues, expenditures, reserves, or one-time resources before adoption? Does Council support the proposed approach to reallocate the ARPA funds? Does Council support the proposed department staffing and service-level assumptions? Does Council support the FY 2026-27 CIP priorities and enterprise fund assumptions? What additional direction does Council have regarding long-term forecast deficits and structural budget pressure? What actions should staff prioritize to grow the tax base and support business attraction, retention, tourism, broadband, housing, and redevelopment? What follow-up information should staff provide before final adoption? Any changes to Measure AA/AB Advisory Measure?
9. Recommended Next Steps
Receive and discuss the FY 2026-27 Proposed Budget presentation.
Provide direction to staff on any changes to the proposed budget.
Confirm final assumptions for the General Fund, enterprise funds, CIP, staffing, reserves, and one-time resources.
Direct staff to prepare final budget documents for public hearing and adoption.
Schedule mid-year budget review to monitor revenue performance, expenditure trends, grant reimbursements, enterprise fund performance, and long-term forecast risks.
Budget Discussion Outline
City of Fort Bragg | FY 2026-27 Budget Workshop