FY 2026-27 REVISED Proposed
Operating & Capital Budget
Item 8a
June 9, 2026
Agenda
3 Actions for Budget Adoption
1) Set the Fiscal Year (FY) 2026-27 Gann Limit
2) Readopt the City’s Investment Policy
3) Adopt the Fiscal Year FY 2026-27 Operating and
Capital Budget
Set Gann Appropriations Limit
• Annual review required by State law
• Intent is to limit the appropriation of tax proceeds to limit growth of tax-funded programs
• Figure is based on 1979 base year limit, adjusted for inflation since
FY 2026-27 Gann Limit and Estimated Tax Revenue
• Legal limit for taxes we can collect and spend: $39.5M • Projected tax revenues: $18.8M
Readopt City Investment Policy
• Annual review required by State law
• A few minor changes made to language
• The policy is consistent with State law / industry best practices - Outlines safety, liquidity, and yield as key objectives - Identifies positions permitted to invest funds
- Identifies internal controls & standards of care
- Outlines allowable investment types (governed by State law) REVISED Proposed FY 2026-27 Budget
Citywide Revenue Budget
• DRAFT Proposed Revenue Budget: $63.0M
• $53.4M for Operations
• $9.6M for Capital Projects
• REVISED Proposed Revenue Budget: $58.4M
• $53.5M for Operations
• $4.9M for Capital Projects
• Net decrease of $4.6M from Draft Proposed Budget
Citywide Expenditures Budget
• DRAFT Proposed Expenditures Budget: $58.7M
• $49.1M for Operations
• $9.6M for Capital Projects
• REVISED Proposed Expenditures Budget: $52.4M
• $47.5M for Operations
• $4.9M for Capital Projects
• Net decrease of $6.3M from Draft Proposed Budget
General Fund
General Fund Revenue
Revenue Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Property Taxes 6,179,220 - 6,179,220 Intergovernmental Revenues 562,500 - 562,500 Sales & Use Tax 2,760,400 20,912 2,781,312 Cannabis City Tax 502,250 - 502,250 Transient Occupancy Tax 4,600,000 81,800 4,681,800 Franchise Fees 834,500 - 834,500 Licenses & Permits 769,040 - 769,040 Revenues from Current Services 2,041,443 - 2,041,443 Fines & Forfeitures 11,105 - 11,105 Interest Income 425,000 - 425,000 Rental Income 466,100 - 466,100 Other Revenues 786,400 - 786,400
Interfund Transfers 1,531,764 - 1,531,764 Total Revenues 21,469,722 102,712 21,572,434 General Fund Expenditures
Expenditure Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Personnel Services 15,393,364 (147,274) 15,246,090 Supplies 790,453 - 790,453 Other Expense 65,600 - 65,600 Services 3,671,573 - 3,671,573 Debt Service 699,411 (664,221) 35,190 Interfund Transfers 1,763,528 - 1,763,528 Total Expenditures 22,383,929 (811,495) 21,572,434 General Fund Summary
General Fund Revenues $21,572,434
General Fund Expenditures $21,572,434
Surplus (Shortfall) $-
Measure Q/E Fund
Measure Q/E Fund Expenditures
Expenditure Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Maintain Public Safety Services 2,547,220 - 2,547,220 Maintain/Enhance Cleanliness and Safety of Public Spaces 988,961 - 988,961 Invest In Infrastrucure and Equipment 1,676,253 (600,000) 1,076,253 Maintain Financial Health of the City - - - Total Expenditures 5,212,434 (600,000) 4,612,434 Measure Q/E Fund Summary
Measure Q/E Fund Revenues $4,505,000
Measure Q/E Fund Expenditures $4,612,434
Surplus (Shortfall) ($107,434)
Affordable Housing
In-Lieu Fund
Affordable Housing In-Lieu Fund
Expenditures
Expenditure Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Services 235,000 (135,000) 100,000 Total Expenditures 235,000 (135,000) 100,000 Economic Development
Fund
Economic Development Fund
Expenditures
Expenditure Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Personnel Services 55,346 (55,346) - Supplies 10,000 - 10,000 Services 72,500 - 72,500 Total Expenditures 137,846 (55,346) 82,500
Sewer Operating Fund
Sewer Operating Fund Revenues
Revenue Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Revenues from Current Services 9,460,000 - 9,460,000 Fines & Forfeitures 30,000 - 30,000 Interest Income 1,300,000 - 1,300,000 Rental Income 20,000 (20,000) - Interfund Transfers 37,000 - 37,000 Total Revenues 10,847,000 (20,000) 10,827,000 Capital Improvement
Program Budget
Capital Improvement Program Budget
Revenue/Expenditure Category
DRAFT
Proposed
Budget
Increase/
(Decrease)
REVISED
Proposed
Budget
Morro Elementary School Site Acquisition 5,300,000 (5,300,000) - Annual Pavement Management Program 1,296,214 (600,000) 696,214 Wildland Fire Engine 770,000 - 770,000 Police Radio Communications Upgrade 317,687 - 317,687
City Asphalt Sealer Replacement 90,000 - 90,000 Trash/Recycling Can Replacements-Phase II 30,000 - 30,000 Update Engineering Specifications & Drawings 300,000 - 300,000 Bayshore Bluffs Landing Improvements 300,000 - 300,000 Quintana Water Line Repair 300,000 - 300,000
Supplemental Harbor Dredging 150,000 - 150,000
North T-Pier Renovations 300,000 1,200,000 1,500,000 Harbor Vessel Re-Power 437,652 - 437,652 Total Revenue/Expenditures 9,591,553 (4,700,000) 4,891,553 Staff recommends that the City Council:
• Adopt Resolution No. 32-26 Adopting the FY 2026-27
Operating and Capital Budget
• Adopt Resolution No. 33-26 Readopting the City’s
Investment Policy
• Adopt Resolution No. 34-26 Setting the FY 2026-27 Gann Appropriations Limit
Recommendations
Ten-Year Forecast
General Fund