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4 DATE: June 1, 2026
TO: Mayor and Members of the City Council
President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
FROM: Stefan Chatwin, City/District Manager
Nate Cruz, Finance Director/Treasurer
Waqas Hassan, Assistant Finance Director
Kitty Dandan, Financial Services Manager
DEPARTMENT: City Manager, Finance
SUBJECT: PUBLIC HEARING FOR FY 2026-27 and FY 2027-28
PRELIMINARY BUDGET
RECOMMENDATION
It is recommended that the City Council/EMID Board (“City Council”) receive public comments regarding the FY 2026-27 and FY 2027-28 Preliminary Budget and provide direction to finalize the budget. Such direction provided by the City Council and recorded via minute order will then be incorporated in the Final Budget for adoption on June 15, 2026. The Five-Year Financial Plan will also be updated accordingly.
EXECUTIVE SUMMARY
As part of the FY 2026-27 and FY 2027-28 budget development process, the City Council held a budget study session on March 23 to review various sections of the Preliminary Budget, including the CIP Funds, Enterprise Funds, and Internal Service Funds. On May 19, 2026, the City Council reviewed the entire Preliminary Budget, including all Governmental Funds.
The June 1, 2026 Public Hearing provides the public an opportunity to comment on the Preliminary Budget and for the City Council to consider their input before providing direction with respect to the adoption of the Final Budget for FY 2026-27 and FY 2027- 28 scheduled on June 15, 2026.
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4 BACKGROUND AND ANALYSIS
The City Council has held three (3) study sessions on the budget in 2026 (the February 10th Council Retreat, and the March 23rd and May 19th special meetings. On May 19, staff presented the FY 2026-27 and FY 2027-28 Preliminary Budget and Five-Year Financial Plan for FY 2026-27 to FY 2030-31 for all Funds, including the General Fund (001 to 003) which showed an operating surplus but requires General Fund reserves to transfer sufficient funds to capital. See the linked May 19 staff report and the Preliminary Budget for more details.
Since May 19, staff has been working to incorporate the following changes into the Final Budget that will be presented on June 15, 2026:
The Consumer Price Index for April 2026 provides for a 3.8% cost of living adjustment on July 1, 2026 instead of the 3% that had been previously assumed; Removal of a new position request for a Recreation Supervisor until a Parks and Recreation organizational assessment is completed (anticipated for later in FY 2026-27);
A reduction to the cost of holding the 2026 municipal district elections; Update the budget for wholesale water to align to the rates announced by the SFPUC and presented to Council on April 20th; and
Various corrections, clarifications, adjustments, and formatting changes.
The changes discussed on May 19, as well as any additional direction received at the June 1, 2026 meeting, will be incorporated into the Final Budget that is scheduled for adoption on June 15, 2026.
It would be appropriate for the City Council to receive public testimony relative to the FY 2026-27 and FY 2027-28 Preliminary Budget. Upon hearing the public testimony, City staff recommends that the City Council provide direction towards the preparation of the Final Budget.
California Environmental Quality Act
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that is an administrative activity that will not result in a potentially significant impact to the environment.
FISCAL IMPACT
Based on City Council direction at the June 1, 2026 public hearing, staff will incorporate adjustments in the FY 2026-27 and FY 2027-28 Final Budget for adoption on June 15, 2026.
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4 CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA Staff Empowerment and Operational Excellence