City of Fullerton, CA
July 14, 2026
Budget Study Session
FY 2026-27 Proposed Budget
Budget Study Session Agenda
FY 2026-27 Proposed Capital Improvements Program Budget FY 2026-27 Proposed Budget Overview
All Funds Operating Budget
General Fund Operating Budget
General Fund Proposed Budget Scenarios
Budget Community Meeting Results
2 Budget Study Session Agenda
Continued
Ad Hoc Fiscal Sustainability Committee Recommendations Grant Thornton – Five Year Financial Forecast Analysis 3 Capital Improvements Budget
4 FY 2026-27
Proposed CIP
Budget
5 CIP / Infrastructure Projects
Street Rehabilitation Planned Projects:
Arterial Projects:
State College Blvd, Harbor Blvd, Rosecrans Ave
Euclid St and Yorba Linda Blvd (Design only)
Residential:
Cannon-Shepard Area, Courtney-Ash Area. Rancho-Verona-Yucca Area, Yale-Santa Fe-Princeton Area Slurry Seal/Pavement Treatment:
Various Streets.
Water Infrastructure Planned Projects:
Water Main Replacement
PFAS Management, SCADA upgrades, Upgrade designs for Generators, Reservoirs, Wells Sewer & Storm Drain Planned Projects:
Miscellaneous Storm Drain Repair and Rehabilitation
Sewer Main Repairs and Replacements
6 CIP / Infrastructure Projects
Traffic Systems Planned Projects:
Traffic systems upgrades and repairs
Traffic signal synchronization
Street Light conversion
Miscellaneous Infrastructure Projects:
Curb, Gutter and Sidewalk Reconstruction
Pavement Management Plan (PMP) Update
City Facilities Projects:
Repairs and renovations at various City facilities
ADA improvements
7 FY 2026-27 Proposed Budget
8 Budget Primer on Municipal Finance
• General Funds: The City’s primary operating fund responsible for providing municipal services residents rely upon, including police, fire, parks, libraries, planning, code enforcement, public works, recreation programs and general government administration. • Enterprise Funds - Operate similarly to a business and are self-operating, supported primarily through user fees rather than taxes.
Water, Sewer, & Airport enterprise funds
• Special Revenue Funds – Are legally restricted revenues for specific programs or activities, such as transportation funding, grants, & other dedicated sources. Measure M2, Gas Tax and SB1 funds, & CDBG block grant program • Internal Service Funds - Provide centralized support services to City departments, including fleet replacement, equipment maintenance, information technology and facility maintenance, with costs allocated to the departments receiving those service. 9 Proposed All Funds’ Budget
10 FY 26-27
Fund Type Expenditures
General Funds $150,462,773
Special Revenue Funds $39,878,224
Water Fund (Operating Only) $45,973,797
Other Enterprise Funds (Operating only) $13,623,759
C apital Improvements (C IP) $28,883,342
Successor Agency $11,603,925
All Funds Totals $290,425,820
FY 2026-27 General Fund Revenues
11 Property Tax
47%
Sales Tax
22%
Transient
Occupancy Tax
(TOT)
2%
All Other Taxes
3%
Licenses &
Permits
2%
Charges for
Services
12%
Other Revenues
10%
Library, Parks and
Recreation
2%
* Includes Fines & Penalties, Use of Money & Property, Intergovernmental & Other Miscellaneous Revenue.
General Fund Revenue by Category
Proposed
Budget
FY 26-27
% Increase /
Decrease from
Prior Year
Property Tax $66,680,723 6%
Sales Tax 31,308,118 0%
Transient Occupancy Tax (TOT) 3,400,000 -1%
All Other Taxes 3,578,796 2%
Licenses & Permits 2,772,115 12%
Charges for Services 16,505,687 -7%
Other Revenues * 14,749,124 6%
Human & Leisure Services
(Library, Parks & Recreation) 2,439,810 0%
General Fund Revenue $141,434,373 3%
FY 2026-27 General Fund Expenditures
12 Expenditures by Major Program Area Proposed Budget
FY 26-27
Fire 40,185,696
Police 70,987,843
Community & Economic Development 7,540,574
Public Works 11,570,625
General Government (Administration, Admin Svcs, HR) 7,483,985 Human & Leisure Services (Library and Parks & Rec) 12,694,048 Total General Fund Expenditures $150,462,771
Current
General Fund
Proposed
FY 26-27 Budget
13 Original Base
Budget
FY 26-27
Current Proposed
Budget
FY 26-27
Total General Fund Balances per FY 24-25 ACFR $26,288,246 $26,288,246 Allocated Fund Balances that are restricted/set aside for other purposes (10,214,077) (10,214,077) Available General Fund Beginning Fund Balance $16,074,169 $16,074,169 Revenues 141,434,373 143,885,227
Base Operating Revenues 141,434,373 141,434,373
Revenue Adjustments - 1-Time Restricted Funds for Operations - 461,557 Revenue Adjustments - 1-Time Revenues - 1,247,297 Revenue Adjustments - Ongoing or New Revenue - 742,000 Expenditures (150,462,773) (145,052,455)
Expenditure Operating Budget (150,462,773) (151,911,954) Budget Reductions - Personnel-Unfunding of Vacancies ~ 9 FTE 2,781,968 Budget Reductions - Operations & Maintenance 1,820,560
ISF Reductions - To allocations to Workers Comp & Liability ISFs - 2,256,971 Projected Operating Surplus (Deficit) - No Transfers ($9,028,400) ($1,167,228) Transfers In 678,087 2,373,087
Transfers In from Traffic Safety Fund 300,000 300,000 Transfers In from IT Fund - Server Repl. Loan 378,087 378,087 Transfers In - 1-Time from Various Funds - 1,695,000 Revenues & Transfers In Total $142,112,460 $146,258,314 Transfers Out (5,417,131) (5,017,131)
Transfers Out to Infrastructure Fund (3,978,225) (3,978,225) Transfers Out to CIP Fund - Residential Streets (500,000) (500,000) Transfers Out to IT Fund - IT Projects (938,906) (538,906) Expenditures & Transfers Out Total ($155,879,904) ($150,069,586) Net Operating Surplus/(Deficit) w/ Transfers ($13,767,444) ($3,811,272) Ending Available Fund Balance $2,306,725 $12,262,897
Projected Contingency Reserve $2,306,725 $12,262,897
Projected Contingency Reserve % 2% 8.5%
General Fund Current Fiscal Landscape
A structural deficit occurs when the recurring cost of providing municipal services grows faster than the recurring revenues available to support those services. Like the State of California and many cities within the State, Fullerton is facing an operating deficit in their General Fund.
• Rising expenditure costs (i.e. competitive salaries and UAL pension costs), revenue growth challenges & growing cost of doing business.
Baseline Structural deficit of $3.8 million.
Scenario Budget Options for Council consideration to reduce operating deficit / assist in balancing the operating budget.
14 Budget Scenarios A, B & C
15 Scenario A
Baseline Service & Use of
Reserves
Scenario B
Balanced Budget for FY 26-27
(Year 1 only) & Service
Reductions and Deferrals
Scenario C
Balanced Budget FY 26-27 – FY
28-29 (3 Years) & Structural
Deficit Reductions
Budget Reduction: ($4,602,528)
Unfunding of 9 FTEs
Use of Reserves: ($3,811,272)
Budget Reduction: ($6,165,500)
Unfunding of 24 FTEs
Increased Use of 1-Time Funds in Year 1
Use of Reserves: $0
Budget Reduction: ($6,997,193)
Unfunding of 32 FTEs
Use of 1-Time Funds over 3 years
Use of Reserves: $0
Budget Scenarios’ Forecasts
16 Budget Scenario A - Baseline Services &
Use of Reserves
17 FY 26-27
Proposed Budget
FY 27-28
Forecast
FY 28-29
Forecast
Available General Fund Beginning Fund Balance $16,074,169 $12,262,897 $9,350,247 Revenues 143,885,227 150,006,152 154,241,834
Expenditures (145,052,455) (148,579,890) (154,442,128) Projected Operating Surplus (Deficit) - No Transfers ($1,167,228) $1,426,263 ($200,294) Transfers In 2,373,087 678,087 678,087 Revenues & Transfers In Total $146,258,314 $150,684,239 $154,919,921 Transfers Out (5,017,131) (5,017,000) (5,137,510) Expenditures & Transfers Out Total ($150,069,586) ($153,596,890) ($159,579,638) Net Operating Surplus/(Deficit) w/ Transfers ($3,811,272) ($2,912,650) ($4,659,717) Ending Available Fund Balance $12,262,897 $9,350,247 $4,690,530 Projected Contingency Reserve $12,262,897 $9,350,247 $4,690,530 Projected Contingency Reserve % 8.5% 6.3% 3.0%
Budget
Scenario B -
Balanced Budget
for FY 2026-27
(Year 1 Only) &
Service
Reductions and
Deferrals
18 FY 26-27
Proposed Budget
FY 27-28
Forecast
FY 28-29
Forecast
Available General Fund Beginning Fund Balance $16,074,169 $16,074,169 $15,148,608 Revenues 143,885,227 150,006,152 154,241,834
Expenditures (145,052,455) (148,579,890) (154,442,128) Projected Operating Surplus (Deficit) - No Transfers ($1,167,228) $1,426,263 ($200,294) Transfers In 2,373,087 678,087 678,087 Revenues & Transfers In Total $146,258,314 $150,684,239 $154,919,921 Transfers Out (5,017,131) (5,017,000) (5,137,510) Expenditures & Transfers Out Total ($150,069,586) ($153,596,890) ($159,579,638) Net Operating Surplus/(Deficit) w/ Transfers ($3,811,272) ($2,912,650) ($4,659,717) Ending Available Fund Balance $12,262,897 $13,161,518 $10,488,890 Additional Budget Balancing Options
Budget Reductions - Unfunding of Add'l 15 FTE Vacant Positions 1,472,366 1,487,089 1,501,960 Budget Reductions - Operations & Maintenance - - - 1-Time ISF Reserves - Payback to General Fund 1,500,000 500,000 - 1-Time Deferred Maintenance & Infrastructure 838,906 - - Projected Net Operating Surplus/(Deficit) w/ Add'l Reductions ($0) ($925,561) ($3,157,757) Ending Available Fund Balance w/ Additional Reductions $16,074,169 $15,148,608 $11,990,850 Projected Contingency Reserve $16,074,169 $15,148,608 $11,990,850 Projected Contingency Reserve % 11.1% 10.2% 7.8%
Budget Scenario
C - Balanced
Budget for
FY 26-27 thru
FY 28-29 (3 Years)
& Structural
Deficit
Reductions
19 FY 26-27
Proposed Budget
FY 27-28
Forecast
FY 28-29
Forecast
Available General Fund Beginning Fund Balance $16,074,169 $16,074,169 $16,074,169 Revenues 143,885,227 150,006,152 154,241,834
Expenditures (145,052,455) (148,579,890) (154,442,128) Projected Operating Surplus (Deficit) - No Transfers ($1,167,228) $1,426,263 ($200,294) Transfers In 2,373,087 678,087 678,087 Revenues & Transfers In Total $146,258,314 $150,684,239 $154,919,921 Transfers Out (5,017,131) (5,017,000) (4,887,510) Expenditures & Transfers Out Total ($150,069,586) ($153,596,890) ($159,329,638) Net Operating Surplus/(Deficit) w/ Transfers ($3,811,272) ($2,912,650) ($4,409,717) Ending Available Fund Balance $12,262,897 $13,161,518 $11,664,452 Additional Budget Balancing Options
Budget Reductions - Unfunding of Add'l of 23 FTE Vacant Positions 2,341,673 2,859,129 3,024,066 Budget Reductions - Operations & Maintenance 52,992 53,522 54,057 1-Time ISF Reserves - Payback to General Fund 1,000,000 - 1,000,000 1-Time Deferred Maintenance & Infrastructure 416,607 - 331,594 Projected Net Operating Surplus/(Deficit) w/ Add'l Reductions ($0) $0 $0 Ending Available Fund Balance w/ Additional Reductions $16,074,169 $16,074,169 $16,074,169 Projected Contingency Reserve $16,074,169 $16,074,169 $16,074,169 Projected Contingency Reserve % 11.1% 10.8% 10.4%
Administration Departments
City Manager, City Clerk, Administrative Services, Human Resources 20 GF: General Fund
Service & Operating Impacts of
Scenario Options
21 • Hold of Vacant Positions: Increases workload for existing Administration staff through reassigned duties, reduces the department’s capacity to support other departments, and limits the department's ability to proactively address organizational needs. • To offset reduction of on-site security personnel, existing Utility Services front counter staff will assist daily visitors and patrons coming to City Hall. In addition, PD would be called upon to respond to disruptive behavior or de-escalate incidents that occur in City Hall.
Community & Economic Development
22 Service & Operating Impacts of
Scenario Options
23 Scenario A: Maintain Baseline Services
• A reduction to Building professional services would reduce the support used to manage this vacancy and more than 8,700 annual permit transactions. Without miscellaneous salary adjustments we will continue to face recruitment challenges and reliance on professional services / consultants.
Scenario B: Moderate Service Reductions
• Underfilling the Code Enforcement Manager would reduce capacity for supervision, policy and process improvements, complex cases, coordination, and Council and community response, while Planning capacity for entitlements, plan check, State mandates, code updates, and long-range work would also be strained. An entry-level Economic Development Specialist would provide needed support, but if the division remains limited to a Manager and Specialist, expectations for deliverables would need to be adjusted.
Scenario C: Expanded Service Reductions
• All vacant positions are frozen or eliminated and existing professional services would not be sufficient to offset the staffing gaps. This level of reduction would constrain the same functions needed to generate revenue, streamline permitting, advance development, and support businesses. It would also slow or reverse recent service and process improvements, resulting in longer timelines, reduced capacity, and fewer resources for proactive initiatives.
Fire Department
24 Service & Operating Impacts of
Scenario Options
25 Personnel Reductions:
• Unfunding the Deputy Chief of Administration / Fire Marshal would remove leadership over Fire Prevention and Fire Administration.
This will lead to reduced administrative, financial, and regulatory oversight, slower processing times for complex development projects. In addition, this will lead to reduced capacity to focus on strategic planning, leadership initiatives, & other cri tical departmental priorities due to the redistribution of duties, and a significant workload increase for the Fire Chief and the D eputy Chief of Operations.
• Other duties under the Deputy Chief of Administration / Fire Marshal include: Fire inspections, conducting fire investigations, overseeing fire safety programs, leading wildfire mitigation efforts, grants and contracts management, ambulance operations, emergency reimbursement coordination, and serving as the Department's Public Information Officer.
Maintenance & Operations Reductions:
• Eliminating budget for backup Plan Check services reduces coverage for large or specialty projects, putting the 10 business day turnaround goal at risk & services will be impacted. Without annual renewal mailer, we may see a decrease in the number subscription renewals and revenue. Merchant fee reductions have minimal operational impact. • Furniture used by ambulance crews operating at three fire stations, is constantly utilized, and are subject to accelerated wear and tear.
Library Department
26 Service & Operating Impacts of
Scenario Options
27 Scenario A and B
• Security cameras and City staff will be the primary crime deterrents at Hunt Library. • Support groups will be asked to fund the entire Library book budget and portions of the electronic resources budget, for an undetermined amount of time.
Scenario C
• Same as above plus unfunds one vacant Library Technology Assistant (LTA) that is responsible for technology support for staff and public.
• This would be particularly impactful on evenings and Saturdays when City tech support is not available. • This position provides on site troubleshooting, maintenance, and real time fixes to our Audio/Visual systems, Integrated Library System, Automated Materials Handler, public computers and printers, staff computers and printers, and more.
Parks & Recreation
28 Service & Operating Impacts of
Scenario Options
29 Scenario A – Maintain Baseline Services
• Preserves current Parks and Recreation staffing with no position reductions. • Reduces the scope of City special events, including a fireworks-only Fourth of July celebration and proposed First Night reduction.
• Implements operational efficiencies, including an online-only recreation brochure and reduced security at the Fullerton Community Center.
Scenario B – Moderate Service Reductions
• Includes all Scenario A reductions and unfunds four vacant positions, reducing administrative, communications, and project management support long-term.
• Reduces the department's capacity to support recreation programs, capital projects, and community engagement while maintaining core services.
Scenario C – Expanded Service Reductions
• Includes all Scenario A and B reductions and unfunds additional 2 vacant positions (total of 6 vacant positions) across parks, recreation, and administrative functions.
• Results in broader reductions to recreation programming, project delivery, and operational support, with a greater impact on overall service levels.
Police Department
30 Service & Operating Impacts of
Scenario Options
31 • Further reduction in sworn personnel (131 to 127 in Scenario A or 131 to 125 in Scenarios B & C) may require the collapse of the Community Services Bureau so personnel can be reassigned to staff patrol. This causes the least impact on the organization and the citywide service level. • Reduction of officers assigned to Investigations and Traffic Bureaus, resulting in a delay in investigations and a reduction in traffic safety.
• This reduction may result in further vacancies as officers choose to lateral to other departments with more opportunity, which will cause a cascading effect of collapsing units to staff patrol. • Reassignment of Operation Clean Streets funds to augment patrol staffing and reduce ability to fund other proactive policing endeavors.
• Unfunding Police Lieutenant will result in less administrative supervision capacity and reduce ability to accomplish special projects at the Management Level.
Public Works
32 Service & Operating Impacts of
Scenario Options
33 Scenario A – Maintain Baseline Services
• Reduction in Engineering personnel and professional consultant support means delays and/or impacts the ability to plan, fund, and deliver CIP projects, delays in private development processing, traffic engineering studies / reviews, increased workload and lower technical efficiency. • Graffiti Abatement Services reduction from 2 units to 1 unit will result in slower response times for graffiti removal. • Utilizing Facility Capital Repair Fund Balance (1-time reduction) will defer Facility Capital maintenance for 1 year and is not sustainable for the long-term.
Scenario B – Moderate Service Reductions (All Service & Operating Impacts from Scenario A) • Additional increased workload and lower technical efficiency with CIP, Traffic Engineering, and Private Development projects. • Slower response time for Streets and Storm Drain Maintenance – pothole, patches, overlay, sidewalk, street signages, litter and debris cleanup, traffic control on special events, storm drain inspection, repair and maintenance, and emergency responses. • Slower response time for Landscape Maintenance – parks, trails, medians, debris clean up, tree maintenance, emergency responses and homeless encampment cleanup.
• Utilizing Building Maintenance Fund Balance is 1-time, will defer building maintenance capital repairs and not sustainable for the long-term.
Scenario C – Expanded Service Reductions (All Service & Operating Impacts from Scenario A & B) • Construction Inspector - Delay implementing and delivery of Capital Improvement projects. • Slower response time for Streets and Storm Drain Maintenance as stated above.
Budget Community Meetings
34 Community Budget Outreach Summary
• The City of Fullerton hosted two Community Budget
Workshops on Tuesday, July 7, 2026, and Thursday,
July 9, 2026, to educate residents on the City's
financial outlook and provide opportunities for public
participation in the budget planning process.
• Each workshop included a presentation that provided
an overview of the City's financial condition, education around municipal finances and budget scenarios for
consideration.
• Following the presentation, attendees participated in an interactive exercise designed to gather community
input on three key questions.
35 City Services
At the meeting and in
the online survey,
participants reviewed
City service areas and
selected whether each
service should be
strengthened (green),
maintained (yellow) or
reduced (red).
36 Revenue Options
Participants also
reviewed potential
revenue options and
indicated whether they
were open to exploring
each option (green),
needed more
information (yellow) or
were not supportive or
had concerns (red).
37 Budget Scenarios
Participants reviewed
potential budget scenarios
and indicated which approach
they found most acceptable
(green), would modify (yellow)
or most concerning (red).
38 Public Comments
39 • Prioritize core services: Many comments emphasized protecting funding for public safety, road maintenance and essential infrastructure. Several residents specifically opposed reducing police and fire staffing. • Fiscal responsibility and accountability: Respondents called for greater transparency and accountability in City spending, urging the City to balance the budget, reduce unnecessary expenses and ensure funds are used as intended. • Long-term planning: Several comments encouraged the City to take a more proactive approach to financial planning and infrastructure investment, particularly by developing a long-term street improvement strategy rather than relying on reactive repairs. • Explore alternative funding sources: Some participants recommended pursuing grants, public-private partnerships, outsourcing certain non-essential services and evaluating City assets before increasing costs to residents. • Government efficiency and leadership: A few comments called for streamlining operations through technology, reducing overlapping positions, improving City Council accountability and fostering more collaborative leadership. • Need for additional information: A recurring theme was that residents wanted more detail about the budget scenarios, including the specific service impacts, staffing changes and definitions of key terms before making informed decisions. • Other individual comments: Additional suggestions included improving code enforcement (such as illegal fireworks), hiring expertise in areas such as grants or financial management, educating residents about Fullerton's tax structure, and asking questions about available reserves. • Positive feedback: Several participants praised the meeting design, describing it as "creative and out of the box" and "well done, clear, simple, and concise."
Fiscal Sustainability Ad Hoc
Committee
40 Ad Hoc Committee Recommendations
41 Ad Hoc Fiscal Sustainability Committee was reconvened in FY 25-26 to evaluate and make recommendations on potential Sales Tax ballot-measure options.
Ad Hoc Recommendations:
• 2 Committee Members supported 0.5% (or Half-Cent) Dedicated Add-On Sales Tax for Infrastructure and 5% expenditure reductions/downsizing of operating budget. • 2 Committee Members supported 1% (or 1 Cent) General Add-On Sales Tax and 5% expenditure reductions/downsizing of operating budget.
• Sale of City’s Water Utility System: 3 Committee Members expressed support to explore sale of City’s Water Utility System.
Grant Thornton Report –
Five Year Financial Forecast
Analysis
42
PERS normal cost and UAL contributions appear to be incorporated based on current actuarial information and management's forecasting methodology.
Proposed personnel reductions are focused primarily on vacant positions, which reduces immediate implementation risk but does not eliminate the need to monitor service-level impacts.
$(2,105,203) $(5,252,891) $(10,376,032) $(15,549,414)
Recommendations
1. Provide direction on the FY 2026-27 Proposed General Fund Budget, specifically direction on Scenario Options.
2. Provide direction on FY 2026-27 Proposed Capital Improvements Program Budget & Projects Plan.
3. Provide direction on Ad Hoc Committee recommendations and / or additional revenue options.
49