City Council
Work Session - Budget Update
January 6, 2026
1. Review Actions Taken to Balance FY 2025-26 Budget
2. Proposed Format and Content for February Work Session
3. Budget Policy Overview
4. Review Potential Ideas
• Revenue Enhancements
• Expenditure Reductions
• Other Fiscal Sustainability Measures
5. Provide Feedback
Agenda
Budget Status Update from 11/18 Council Direction
Item Estimated
Amount Status
Transfer/loan of funds from Measure C ($3.85
Million is loan) 9,750,000 Complete
One-time transfers in/transfers out 1,900,000 Timeline mid-January Anticipated one-time revenue & recovery from
taxes and deposits 1,500,000
Business Tax audit started | Property Transfer Tax from Southland Mall not yet received | Developer Deposits under accounting review
Increase to the Transient Occupancy Tax 250,000 Dec 16 Council meeting – will report ongoing revenue Reductions in services and supplies 2,797,495 Ongoing savings – will report in Feb Use of OPEB Trust 3,000,000 Will request as two payments for 6 months or reimbursements Personnel-related savings 8,330,487 Throughout Fiscal Year 2025-26 TOTAL Activities $27,534,395
* Personnel related items including additional vacancies and overtime reductions, end assignments for temporary employees, MOU changes, changes to reduce overtime, City Council and unrepresented employee salary changes, and voluntary separation incentive program, layoffs, and other separations were merged into a single line.
In the interest of ensuring the City maintains a balanced budget for FY 2025-26, staff is also working to identify $2 million -$4 million in additional measures to provide the City with a one to two percent operating contingency for unforeseen needs or issues over the next six months.
• Financial Status Report and Projections: Update on actions taken to close FY 2025/26 budget deficit, review of budget-to-actuals, and long-term forecast • Revenue Enhancements: Explore possible revenue measures:
o Business license tax review and ballot measure
o Suggestions from 1/6/2026 Council Meeting and staff survey • Expenditure Reductions: Consider structural, program and service changes • Accountability: Review of draft Budget Policy and recommendations on long- term plans for certain funds impacting General Fund
• Policy Direction: Council discusses and provides direction for FY26/27 and beyond
Proposed Format for February Work Session
PURPOSE:
• To help the City attain and maintain financial sustainability & accountability
• To identify and maintain best practices in budgeting, reserves, and grants
• To set up a clear policy and accountability measures to ensure compliance
• To instill a culture of fiscal prudence citywide
Budget Policy
Budget Ideas
Sources: Council Referral, Staff Survey, Community, and Internal Modernize Business License
Tax UUT on Streaming Services Billboards on City Property Sale or Lease of City-Owned
Property
Enhanced Infrastructure
Financing District/Mello Roos First Responder Fees
Parking
Enforcement/Charges Economic Development
Update Cost of Service Study
and Master Fee Schedule
Restructure and Reduce
Programs and Services Alternate Work Schedules
Overtime and Vacancy
Management
Concessions (City Council,
Executive, Labor)
Pause Contributions to
Internal Service Funds Defer Capital Projects
Pause Community Events
Reduce Grants to
Community Organizations Strengthen Finance Oversight
Revenue Enhancements
Expense and Other
Looking for Feedback / New Ideas
Questions / Discussion