TO: City Council DATE: June 29, 2026 DEPARTMENT: Finance Department
PREPARED BY: Isaac Whippy, City Manager
PRESENTER: Isaac Whippy, City Manager
AGENDA TITLE: Receive Report and Consider Adoption of Resolutions Approving FY 26/27 City of Fort Bragg and Fort Bragg Municipal Improvement District No.1 Budgets, Establishing FY 2026/27 Appropriations Limit, Approving FY 2026/27 Capital Projects Budget ________________________________________________________________________
RECOMMENDATION
Adopt the following Resolutions:
Fort Bragg City Council Resolution approving and adopting the Annual Appropriations Limit for FY 2026/27; Fort Bragg City Council Resolution approving the FY 2026/27 City of Fort Bragg Budget; Fort Bragg Municipal Improvement District No. 1 Resolution approving the FY 2026/27 Municipal Improvement District No. 1 Budget; Joint Fort Bragg City Council and Fort Bragg Municipal Improvement District No. 1 Resolution approving the Fiscal Year 2026/27 Capital Projects Budget; ___________________________________________________________________________
BACKGROUND
Each year, the governing bodies of the City of Fort Bragg and the Fort Bragg Municipal Improvement District No. 1 approve their annual operating and capital budgets by resolution. The adopted budget establishes the financial plan for City and District operations for the upcoming fiscal year and serves as the primary financial management guide for delivering services, funding capital projects, managing reserves, and implementing City Council priorities.
In addition, Article XIIIB of the California Constitution, commonly referred to as the Gann Limit, requires local agencies to adopt an annual appropriations limit by resolution. The appropriations limit is calculated based on changes in population and inflation and establishes the maximum amount of certain tax proceeds that may be appropriated by the City in a fiscal year.
The FY 2026–27 Proposed Budget was developed through a multi-step process that included department budget development, Finance and City Manager review, community input, mid-year budget review, Council budget goal setting, and public budget workshop discussion. The budget reflects City Council priorities, maintains essential services, funds key operational needs, supports long-term infrastructure investment, and preserves the City’s commitment to fiscal responsibility.
DISCUSSION AND ANALYSIS
On June 23, 2026, the City Council and City staff convened for a Budget Workshop to review the proposed FY 2026–27 Budget, discuss major revenue and expenditure assumptions, review General Fund reserves, evaluate long-term forecast trends, and receive Council direction prior to final budget adoption. Direction provided during the workshop has been incorporated into the budget presented for adoption.
The FY 2026–27 Proposed Budget is balanced and maintains essential services while recognizing the financial pressures facing the City. Rising labor costs, medical benefits, CalPERS pension obligations, liability and workers’ compensation insurance, technology costs, utilities, facilities, and contracted services continue to place pressure on City operations. The budget also includes targeted investments in public safety, infrastructure, economic development, housing, parks and recreation, organizational modernization, broadband, and community engagement.
At the March 2026 Mid-Year Budget Workshop, the City Council established six budget goals to guide development of the FY 2026–27 Budget:
Adopt a balanced budget;
Provide additional contributions to the Section 115 Pension Trust when available(50% of surplus of General Fund); Maintain the current level of service with no staff layoffs or program cuts; Maintain operating and litigation reserves;
Provide funding for recession/emergency reserves;
Provide cost-of-living adjustments for staff.
The FY 2026–27 Proposed Budget accomplishes these goals. The General Fund is balanced, essential services are maintained, reserves remain protected, and the budget includes continued investment in the City’s workforce and long-term financial stability.
Appropriations Limit
The City’s FY 2026–27 Appropriations Limit is $12,385,176. Appropriations subject to the limitation total approximately $7,432,932. Therefore, the City of Fort Bragg is not at risk of exceeding the Gann Limit.
Citywide Budget
The FY 2026–27 Proposed Operating and Capital Budget totals approximately $83.3 million. This amount includes City operating funds, enterprise funds, special revenue funds, internal service funds, capital project funds, and other budgeted appropriations. The Citywide budget includes significant capital project funding and therefore should not be interpreted as an operating deficit.
General Fund Budget
The FY 2026–27 Proposed General Fund Budget includes total revenues of $17,233,974 and total expenditures of $17,228,509, resulting in a projected surplus of $5,465. On a $17.2 million General Fund budget, this represents an essentially balanced budget.
The General Fund beginning fund balance is projected at $9,053,459, with an ending fund balance of $9,058,924. The budget maintains strong reserve levels, including operating reserves, recession/emergency reserves, unassigned reserves, and the City’s Section 115 Pension Trust. While the General Fund remains stable, the projected operating margin is narrow and reinforces the need for continued caution, cost control, and long-term financial planning.
Major General Fund cost pressures include employee cost-of-living adjustments, increased medical insurance premiums, CalPERS pension costs, workers’ compensation, retiree medical obligations, public safety technology, insurance premiums, utilities, facilities, fleet, and internal service allocations. The budget also reflects targeted staffing and service capacity decisions, including support for public safety, community development, streets, parks, recreation, and administration.
Capital Projects Budget
The FY 2026–27 Capital Projects Budget totals approximately $20.0 million. The largest capital investments are in the Water Enterprise Fund, Street Maintenance and Traffic Safety, Municipal Facilities, Wastewater Enterprise Fund, Stormwater, and CV Starr-related improvements.
Major FY 2026–27 capital investments include water infrastructure, raw water line improvements, Noyo River Crossing, Pudding Creek Water Main Relocation, wastewater system improvements, roadway revitalization, citywide sidewalk improvements, Willow Street pedestrian improvements, SS4A citywide sign replacement, systematic intersection safety improvements, broadband fiber infrastructure, facility security improvements, City Hall accessibility improvements, Guest House rehabilitation and brick pointing, and stormwater improvements.
These investments reflect the City’s continued commitment to maintaining essential infrastructure, improving public safety, supporting water resilience, strengthening transportation and pedestrian infrastructure, and positioning Fort Bragg for long-term resilience.
Enterprise Funds
The FY 2026–27 Budget includes continued support for the City’s enterprise operations, including Water, Wastewater, CV Starr Community Center, and MCN/Broadband.
The Water and Wastewater funds continue to focus on system reliability, regulatory compliance, capital reinvestment, infrastructure renewal, and long-term financial sustainability. The City completed a Water Rate Study during FY 2025–26, the first comprehensive water rate review since 2014, to help align revenues with the true cost of service and long-term capital needs.
The CV Starr Community Center budget reflects a transition from major one-time capital investments in the prior fiscal year to a more operationally focused budget. Revenues were impacted in FY 2025–26 by pool closures, but are expected to improve as operations stabilize. The budget also supports recreation programming, youth activities, facility use, and implementation of the updated fee schedule and financial sustainability study.
The MCN/Broadband Enterprise Fund reflects continued transition from construction and customer migration into long-term utility operations. With broadband construction substantially completed and customer activation beginning, the City will focus on marketing, customer service, system reliability, subscriber growth, and financial performance.
Long-Term Forecast
The City’s five-year General Fund forecast shows that while the FY 2026–27 Budget is balanced, ongoing expenditures are projected to grow faster than ongoing revenues in future years. Beginning in FY 2027–28, the City is projected to face annual operating deficits unless revenues grow, costs are controlled, or service levels are adjusted.
These trends do not signal an immediate fiscal crisis, but they are important warning signs. The City must remain prudent and nimble, protect reserves, avoid using one-time resources for ongoing costs, grow and diversify the local tax base, and continue looking for efficiencies in the delivery of core government services.
Economic development, business retention and attraction, downtown revitalization, tourism reinvestment, broadband, housing, and redevelopment opportunities will be critical to strengthening the local economy and supporting long-term revenue growth.
FISCAL IMPACT
Adoption of the attached resolutions will approve the FY 2026–27 City of Fort Bragg Budget, the Fort Bragg Municipal Improvement District No. 1 Budget, the FY 2026–27 Capital Projects Budget, and the City’s FY 2026–27 Appropriations Limit.
The FY 2026–27 General Fund Budget is balanced, with projected revenues of $17,233,974 and projected expenditures of $17,228,509, resulting in a projected surplus of $5,465. The projected ending General Fund balance is $9,058,924.
The Citywide Operating and Capital Budget totals approximately $83.3 million. The FY 2026–27 Capital Projects Budget totals approximately $20.0 million.
CONSISTENCY/STRATEGIC PLANNING
The FY 2026–27 Budget is consistent with the City Council’s adopted Strategic Plan and supports the following goals:
Invigorate Economic Opportunity and Community Vibrancy; Implement Resilient Infrastructure and Encourage Environmental Stewardship; Strengthen Public Safety and Emergency Preparedness;
Enhance Public Places, Promote Recreation, and Cultivate Civic Pride; Fund Our Future with Financial and Fiscal Responsibility; Champion a Sustainable Municipal Organization;
Communicate with Active Community Engagement.
The budget advances these goals through investments in public safety, infrastructure, housing, economic development, downtown revitalization, parks and recreation, broadband, organizational modernization, emergency preparedness, tourism reinvestment, and long-term financial planning.
IMPLEMENTATIONT/TIMELINE
If adopted, the FY 2026–27 Budget will take effect on July 1, 2026. The adopted budget will be posted on the City’s website. Paper copies will be available for public review at City Hall and the Fort Bragg Library. Printed copies may also be purchased through the City Finance Department.
The budget will serve as the City’s financial management guide for FY 2026–27. Staff will closely monitor revenues, expenditures, reserves, grants, capital projects, and enterprise fund performance throughout the fiscal year. A mid-year budget review will be brought to the City Council in early 2027, or sooner if needed, to evaluate budget performance and recommend adjustments.
ATTACHMENTS
FY 2026/27 Operating Budget & Capital Improvement Budget Fort Bragg City Council Resolution approving and adopting the Annual Appropriations Limit for Fiscal Year 2026/27.
Fort Bragg City Council Resolution approving the Fiscal Year 2026/27 City of Fort Bragg Budget.
Fort Bragg Municipal Improvement District No. 1 Resolution approving the Fiscal Year 2026/27 Municipal Improvement District No. 1 Budget.
Joint Fort Bragg City Council and Fort Bragg Municipal Improvement District No. 1 Resolution approving the Fiscal Year 2026/27 Capital Projects Budget.
AGENDA ITEM NO. 4A
CITY COUNCIL STAFF REPORT