May 19, 2026
Finance Department
DATE: May 19, 2026
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager – Internal Services
LaShonda White, Deputy City Manager – Community
Services
Emily Combs, Director of Finance
Mubeen Qader, Deputy Director of Finance
Patrick Seals, Administrative Chief
Jerry Gurule, Accounting Manager
Antonio Banuelos, Accounting Manager
Subject:
Fiscal Year 2026-27 Draft Budget Department
Presentations and Budget Updates
FINANCIAL IMPACT: There is no financial impact associated with receiving this agenda item.
PREVIOUS COUNCIL
ACTION:
On May 5, 2026, the City Council received the first draft of the Fiscal Year 2026-27 Annual Operating Budget and
Fiscal Year 2026-31 Five-Year Capital Improvement
Plan, including departmental presentations from
Community Development, Police, and Public Works.
STATEMENT OF THE
ISSUE:
City Staff are providing departmental presentations and an update on financial and operational considerations as part of the ongoing development and review of the Fiscal Year 2026-27 Annual Operating Budget and Fiscal Year
2026-31 Five-Year Capital Improvement Plan.
AGENDA
REPORT
May 19, 2026
RECOMMENDED ACTION:
RECEIVE an update on departmental presentations from
Community Services, Economic Development, and Fire
Departments as part of the continued review of the draft Fiscal Year (FY) 2026-27 Annual Operating Budget and
FY 2026-31 Five-Year Capital Improvement Plan, with
discussions upon completion of all departmental
presentations; and RECEIVE updated financial and
operational considerations – City Manager’s
Office/Finance Department (Shasa Curl/Emily
Combs/Mubeen Qader 510-412-2077).
DISCUSSION:
This report continues the departmental presentations that began on May 5, 2026, as part of the City Council’s review of the draft Fiscal Year (FY) 2026-27 Annual Operating Budget and the FY 2026-31 Five-Year Capital Improvement Plan. On May 5, staff presented overviews from the Community Development, Police, and Public Works Departments. These presentations were intended to provide additional transparency into departmental operations, service delivery requirements, and capacity constraints within the broader context of the City’s budget development process.
To support continuity and maintain visibility into the full budget development timeline, the Proposed FY 2026-27 Budget Schedule is repeated below. This schedule outlines the remaining steps in the review and adoption process, including upcoming departmental presentations, continued development of the budget checklist, and final budget adoption.
Table 1: Key Budget Development Dates
Action/Activity Date
Receive Draft FY 2026-27 Operating Budget and FY 2026-31 Five-Year Capital Improvement Plan; Department Presentations (Community Development, Police, Public Works)
May 5, 2026
Master Fee Schedule; Department Presentations May 19, 2026 Budget Study Session on Proposed FY 2026-27 Operating Budget, FY 2026- 31 Five-Year Capital Improvement Plan and Five-Year Forecast; Department Presentations and Develop Budget Checklist
May 26, 2026
Budget Checklist Follow-up June 16, 2026
City Council to Adopt FY 2026-27 Operating Budget, FY 2026-31 Five-Year Capital Improvement Plan, and GANN Limit June 23, 2026
As part of this next phase of the budget review process, City staff are presenting departmental updates from the Community Services, Economic Development, and Fire Departments at the May 19, 2026, City Council meeting. These presentations provide the City Council and community with additional information regarding departmental
May 19, 2026
operations, workload drivers, service delivery impacts, and priority areas for FY 2026-27. City staff will continue with additional departmental overviews during the May 26, 2026, budget discussions in advance of final budget consideration in June.
Updated Global Economic and Inflation Conditions
City staff continue to monitor global economic conditions that are creating significant uncertainty for municipal operations. Ongoing geopolitical conflicts have increased volatility in global trade routes, energy supplies, and commodity pricing. These disruptions are contributing to higher inflation and rising costs across key operational areas.
National inflation data reflect these pressures. In April 2026, the Consumer Price Index (CPI) increased by 0.6 percent compared to the prior month and 3.8 percent compared to the prior year, which is the fastest annual rate since May 2023 (U.S. Bureau of Labor Statistics, CPI News Release, accessed May 13, 2026). Energy prices accounted for a substantial share of this increase, and real wage growth declined, which indicates that household purchasing power is weakening.
These trends directly affect the City’s budget. Higher fuel prices increase the cost of operating City vehicles, equipment, supplies, etc. Rising utility costs add pressure to building operations, recreation facilities, streetlighting, and water and wastewater systems. In addition, increases in the price of concrete, asphalt, steel, and other construction materials raise the cost of capital projects and routine maintenance.
Contracted service costs are also growing as vendors adjust for higher labor, transportation, and materials expenses. Collectively, these inflationary pressures reduce the City’s purchasing power and increase the cost of delivering basic core services.
Given this uncertainty, City staff recommend maintaining conservative forecasting assumptions, continued caution in financial planning, adherence to the City’s reserve policy, and a focus on innovation to improve efficiency and enhance service delivery.
City staff also recommend ongoing improvements to the built environment (e.g., Complete Streets – lighting, paving, ADA curbs and ramps, landscaping, and medians) to enhance quality of life and reduce health disparities by creating increased access to upgraded parks and launching Advanced Life Support (ALS). Concurrently, City staff recommend that the City Council refrain from launching new programs and encourage April 2026 U.S. CPI Category Breakdown (Year-over-Year %)
May 19, 2026
stakeholders to apply for the $7.9 million in Kids First Initiative funding. Staff will continue to monitor economic indicators as the FY 2026–27 budget is refined.
Workforce Capacity and Position Affordability Update
Personnel related costs remain the City’s largest and fastest growing expenditure category. With salaries, pension obligations, healthcare, and OPEB costs continuing to rise, including an 8.21 percent increase in CalPERS health premiums to $20.8 million City-wide and an increase in retiree healthcare (OPEB) contributions to approximately $3 million, the FY 2026-27 budget can only afford to sustain 684 funded positions based on current projections.
The City currently has 673 filled positions, which reflects steady workforce growth over the past several years. In FY 2021-22, the City had 581 filled positions, and in FY 2020- 21, position control authorized 669 positions, resulting in a net increase of four positions based on what is filled today. This increase in authorized positions over multiple budget cycles has contributed directly to the City’s current vacancy count, as new positions have been added faster than the organization has been able to recruit and hire. While this growth has expanded the City’s capacity to meet rising service demands, it has also increased long-term personnel costs.
Proposed City-wide Priorities for FY 2026-27
The FY 2026-27 budget continues to reflect a focused set of proposed City-wide priorities aimed at maintaining critical infrastructure, improving service delivery, and supporting community needs. These priorities highlight essential areas of operational focus that will guide resource allocation and departmental efforts as the draft budget is refined. City staff are asking the City Council to review these priorities and provide direction on their continued or alternative priorities throughout the remainder of the budget process.
$146
$161
$173
$190 $195 $201
$100
$120
$140
$160
$180
$200
FY 2021-22
581 FTE
FY 2022-23
595 FTE
FY 2023-24
632 FTE
FY 2024-25
660 FTE
FY 2025-26
684 FTE
FY 2026-27
684 FTE
Millions
Total Personnel Costs Escalation
May 19, 2026
Priority #1: Wastewater System Reliability & Veolia Contract Transition
The current Veolia wastewater contract expires in May 2027. Following a City- commissioned review of long-term options, the City is moving forward with a competitive procurement process with an owner’s advisor. This effort aims to secure a qualified operator, address past performance concerns, and prepare for an anticipated increase in operating costs under the next contract and may have a total long-term rate that exceeds $1 billion.
Priority #2: Parks Renovation, Maintenance, and Community Access
Improving Richmond’s parks and open spaces remains a core City-wide priority for FY 2026-27. The City is making significant progress advancing park-related capital and maintenance needs, renovations of play structures, restroom assessments, and upgrades to lighting, fencing, and recreation facilities. In addition, major improvements are underway at Boorman Park, Wendell Park and Shields-Reid Park. It is essential that as the City renovates or builds new parks, we have adequate resources available to properly maintain those assets at a high quality for the continued benefit of Richmond residents. These ongoing efforts demonstrate strong community demand for safe, modern, and accessible parks.
In FY 2026-27, City staff recommend continued prioritization of park infrastructure upgrades, addressing deferred maintenance, advancing key capital projects, and enhancing the quality and usability of neighborhood parks across Richmond. In addition, City staff recommend continued partnership with local community-based organizations, East Bay Regional Park District, and the Trust for Public Land to ensure that planning for Point Molate reflects the desires of the community, such as requests for additional soccer fields, horse stables, and trails
Priority #3: Innovation & City-wide Systems Modernization
In FY 2026-27, the City will advance innovation through streamlined systems, improved processes, and data-informed, efficient service delivery.
Evaluation of Existing Services Before Adding New Programs
As part of the FY 2026-27 budget review, staff are emphasizing the importance of completing a comprehensive evaluation of existing City programs and services before considering the addition of new initiatives. This evaluation will allow the City to better understand the full cost of service delivery, identify operational and staffing needs, and assess where efficiencies, process improvements, or program adjustments may be warranted.
Many departments are currently operating at capacity and rising operating costs have placed additional pressure on service delivery. A structured review of existing programs will help ensure that core services are adequately supported and that the City can maintain effective and sustainable partnerships with community-based organizations.
May 19, 2026
This approach also ensures that any new future programs or expansions are aligned with available resources and organizational capacity, which does not currently exist.
This City-wide review will inform future program planning, guide resource allocation, and support more transparent evaluation of ongoing and long-term service needs.
Investment in the Built Environment and Pavement Funding in FY 2026-27
Continued investment in the City’s built environment remains essential as part of the FY 2026-27 budget development process. Rising construction and material costs, aging infrastructure, and historic underinvestment continue to place pressure on parks, streets, streetlighting, and public facilities.
As noted in the May 5, 2026, agenda report, the City is advancing major park improvements at Boorman Park, Wendell Park, and Shields-Reid Park, along with upgrades to play structures, restrooms, lighting, and other recreation facilities. These projects reflect strong community demand and highlight the need for sustained maintenance resources as new amenities come online.
The City’s pavement network further demonstrates the scale of need. Richmond maintains approximately 584 lane miles with an estimated replacement value of $800 million. To maintain and improve pavement conditions, the City would need to invest approximately $18 million annually. The proposed FY 2026-27 budget currently includes $8 million for pavement maintenance ($10 million Complete Streets in FY 2025-26), which remains well below the level required to prevent continued deterioration. Rising prices for asphalt, concrete, and other materials continue to widen this gap.
These ongoing needs exist within the broader context of approximately $1.15 billion in unfunded capital needs identified across the next decade, including facilities, parks, transportation, stormwater and wastewater infrastructure, and resilience projects.
As outlined in the City Council’s adopted budget schedule, the FY 2026-31 Five-Year Capital Improvement Plan will be presented in detail at the May 26, 2026, Budget Study Session.
May 19, 2026
Departmental Operations, Workload, and Service Delivery Impacts
City staff are continuing the departmental overview format introduced on May 5, 2026, to highlight each department’s core operations, workload drivers, and service delivery impacts for FY 2026-27, providing the City Council and community with a clear picture of operational conditions across the organization.
Community Services
Core Operations
Community Services consists of Employment & Training (E&T), Recreation, Library, Literacy for Every Adult Program (LEAP), Reach-out with Compassion and Kindness (ROCK), and the Office of Neighborhood Safety (ONS). These divisions provide equity- focused programs to boost economic mobility, wellness, and safety in Richmond. E&T offers workforce development and job placement, training, employer partnerships, and compliance reporting. E&T also manages the facility which houses the RichmondBUILD and YouthBUILD programs, as well as a facility near Civic Center which serves as a career center and space for job seekers to receive key services such as case management and training. Recreation oversees two aquatic centers, seven community centers, two senior centers, and the Richmond Memorial Auditorium. In addition to managing facilities, Recreation staff also manage youth, adult and senior programs, sports programs, facility rentals, neighborhood services, special events, tool libraries, and volunteer opportunities.
The Library Division provides diverse materials and services to meet the community’s personal, educational, and professional needs. In addition, the library manages the main library and two branches to ensure community members can safely access these spaces and receive resources and services. LEAP is a free program sponsored by the Richmond Public Library in which tutors and learners work one-on-one or in small groups. LEAP's purpose is to help adults develop the skills and confidence they need to achieve their individual goals. ROCK, a new City program, provides crisis response, behavioral health support, outreach, and service linkage for low-acuity crises. ONS delivers street outreach, violence intervention, conflict mediation, life skills, case management, and Operation Peacemaker Fellowship to reduce gun violence and support high-risk groups.
Operational Demands
Operational demands across Community Services are driven by rising service volume, expanding compliance requirements, major initiatives, and staffing constraints that fully consume existing capacity. E&T faces high pressure from extensive federal Workforce Innovation and Opportunity Act (WIOA) mandates, audit and reporting requirements, grant management, youth employment expansion needs, and upcoming federal policy changes that will dramatically increase service demand without additional funding.
Recreation administers year-round programs, aquatics, afterschool activities, special events, facility rentals, tool library services, and multiple grant funded initiatives. The Library is managing significant operational demands related to maintaining City-wide
May 19, 2026
access to facilities during the renovation of the main library, restoring book processing services following a major vendor closure, and administering multiple large grant-funded initiatives. These responsibilities require substantial staff capacity to support core service delivery and meeting ongoing reporting and compliance obligations tied to major capital and literacy programs. CCRP will support community needs through service delivery by a new team of five ROCK team members. CCRP staff are simultaneously standing up a new division, delivering mobile crisis response services, developing internal systems and policies, and conducting community outreach with limited staffing.
ONS balances intensive street outreach, intervention and prevention services, case management, and multiagency coordination, while also managing administrative and grant reporting obligations that continue to grow alongside program needs.
Service Impacts
Across all divisions, Community Services continues to balance program delivery with available staffing and resources. E&T’s significant compliance and reporting responsibilities influence how quickly workforce programs and employer partnerships can be expanded. Recreation prioritizes core year-round services while assessing opportunities to broaden program offerings as staffing allows. Staffing and funding capacity may impact the Library’s ability to provide convenient service hours, bookmobile access, and ESL and literacy programming. As operational demands increase, residents may experience fewer opportunities to access library resources, educational services, and community support programs. ROCK’s limited staffing affects the pace of policy development, administrative buildout, and expansion of mobile crisis response coverage. The ONS’s administrative and reporting obligations, together with its intensive outreach and case management model, shape the amount of time available for direct community engagement and violence-prevention activities. Collectively, these operational realities guide how the department schedules services, responds to emerging needs, and evaluates opportunities for program enhancement.
Economic Development
Core Operations
The City of Richmond’s Economic Development Department is dedicated to building a vibrant, resilient, and inclusive local economy. Through its six divisions, Arts and Culture, Business Development, Environmental and Health Initiatives, the Port of Richmond, Real Estate, and the Richmond Housing Authority, the department supports business growth, community development, and quality of life for residents, visitors, and businesses. The Economic Development Department supports all six City Council Priority goal areas with the greatest ongoing capacity demands in Goals 1, 2,3, and 6.
Operational Demands
Operational demands within Economic Development continue to expand as the Department advances City-wide initiatives, grant development, and complex reporting requirements. Many of these responsibilities require significant interdepartmental coordination and sustained staff time.
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For RHA specifically, limited staffing structure intensifies these demands, as staff must manage daily housing operations, emergency maintenance, U.S. Department of Housing and Urban Development (HUD) inspections and compliance, environmental review, relocation planning, redevelopment at Nystrom Village, modernization of Richmond Village, and new construction planning at Nevin Plaza II. These combined responsibilities absorb nearly all available capacity.
The Port must manage daily waterfront operations, tenant relationships, emergency repairs, California Air Resources Board (CARB) at-berth compliance, multiple infrastructure assessments at Berths 5–8 and the graving basins, historic building evaluations, complex capital project delivery, and a large multimillion-dollar grant pipeline.
The remaining divisions continue to face significant staffing limitations, with the Arts and Culture and Real Estate Divisions each operating with only one full-time employee, and the Business Development and Environmental and Health Initiatives Divisions staffed by two full-time employees each. These limited staffing levels constrain the divisions’ ability to effectively expand outreach and engagement.
Service Delivery Impacts
The combined responsibilities of Economic Development Department require staff to balance core operational needs with extensive regulatory, reporting, and project management obligations. Limited staffing capacity across all divisions affects the pace at which economic development initiatives, projects, programs, and activities can advance.
Across the Arts and Culture Division, constrained staffing reduces proactive planning, program delivery, community engagement, artist outreach, grant development, and partnership opportunities, resulting in delays to cultural programming, public art, and beautification projects, as well as slower implementation timelines and reduced community access. The Business Development Division’s limited capacity similarly requires frequent reassignment of staff to urgent priorities and compliance obligations, reducing proactive business outreach, retention, strategic planning, and small business support, while contributing to slower response times and deferred initiatives. The Environmental and Health Initiatives Division faces similar constraints, with reduced capacity for outreach, data reporting, grant development, and regulatory compliance oversight, leading to slower project delivery, reduced oversight, and increased reliance on external consultants. At the Port, staffing limitations result in delayed capital projects, slower infrastructure improvements, reduced pursuit of grant opportunities, and frequent diversion of staff from long-range planning to regulatory or emergency needs. At the Richmond Housing Authority, workload pressures contribute to delayed maintenance, slower vacancy turnaround, constrained resident services, and extended timelines for modernization and redevelopment due to compliance and emergency repair demands.
Collectively, these capacity constraints influence the City’s ability to expand programs, accelerate City-wide economic development, and respond to new initiatives. Across all
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areas, staff continue to prioritize essential operations, regulatory compliance, and urgent service demands while managing increasing workload pressures related to long- term housing, infrastructure, environmental stewardship, cultural programming, and economic development needs.
Fire
Core Operations
The Richmond Fire Department delivers comprehensive emergency response services, including fire suppression, medical aid, technical rescues, hazardous materials management, and disaster preparedness. Its five divisions: Administration & Support, Emergency Operations, Training, Fire Prevention, and Emergency Services handle leadership, frontline response, training, inspections and code enforcement, and disaster planning. Together, they ensure Richmond's safety, readiness, and community resilience.
Operational Demands
The Fire Department manages over 14,000 high emergency call volumes annually, state-mandated inspections, intensive training, and a substantial range of administrative responsibilities across all divisions. City staff balance 24/7 response with contract oversight, equipment procurement, station repairs, and coordination with regional partners. The Training Division supports continuing emergency medical services (EMS) education, technical rescue and specialty certification, wellness programming, and compliance with state standards. The Fire Prevention Division is responsible for annual inspections, fire code enforcement, and support for new development and construction review. Emergency Services oversees disaster readiness, hazard mitigation efforts, and ongoing emergency planning. These activities require extensive coordination and time, shaping the department’s capacity to undertake additional initiatives.
Service Delivery Impacts
High operational demands and staffing considerations influence how the Fire Department maintains service levels and schedules critical work. Providing 24/7 emergency response requires frequent backfilling, which can limit the availability of personnel for administrative tasks, proactive community outreach, and broader fire-prevention efforts. Mandatory inspections, certification requirements, and emergency planning obligations contribute to extended timelines for non-emergency projects and program development. These operational realities guide how the department prioritizes core services, evaluates opportunities for process improvements, and plans for future service enhancements within available resources.
NEXT STEPS
City staff will continue refining the draft FY 2026-27 Operating Budget and FY 2026-31 Five-Year Capital Improvement Plan based on City Council direction and updated financial information. The next step in the budget development process is the May 26, 2026, Budget Study Session, where staff will present the remaining departmental overviews, the Five-Year Financial Forecast, and the full FY 2026-31 Capital
May 19, 2026
Improvement Plan. This discussion will provide the City Council with a comprehensive review of capital needs, project priorities, and proposed funding, as well as additional context related to long-term fiscal pressures and operational capacity.
The FY 2026-27 Operating Budget and FY 2026-31 Five-Year Capital Improvement Plan are scheduled for City Council consideration and adoption on June 23, 2026. The Budget Checklist, containing City Council questions and City staff responses from the May 5, 2026, City Council meeting, is attached as Attachment 2.
DOCUMENTS ATTACHED:
Attachment 1 – Draft FY 2026-27 Draft Budget Departmental Presentations Attachment 2 – Draft City Council Budget Checklist