DATE: AUGUST 18, 2026
DEPARTMENT: ADMINISTRATION AND FINANCE
FROM: RENE MENDEZ, CITY MANAGER
SELINA ANDREWS, FINANCE DIRECTOR
TITLE: BIENNIAL (2026/27 – 2027/28) BUDGET UPDATE
RECOMMENDED MOTION:
A motion to approve a resolution authorizing budget adjustments as recommended in this staff report through the use of fund balance and the infrastructure maintenance reserve. (Use of the maintenance reserve requires a 2/3 vote.) EXECUTIVE SUMMARY:
Staff met with the Finance Committee in August to evaluate the possibility of funding additional initiatives that were discussed but not included in the original Biennial Budget. Staff also presented recommendations for further investment in the City’s infrastructure. During this meeting, the Committee discussed the various initiatives and made recommendations to be brought forward to City Council for consideration. In order to provide context for additional budget considerations, it is important to review the initial budget balancing strategies which are presented below in the Background Section. The recommended initiatives are incorporated in this staff report for review.
BACKGROUND:
On June 16, 2026, City Council held a public hearing (budget meeting) to adopt the Biennial Budget. The General Fund Budget for both years was balanced by utilizing multiple strategies to close gaps of $13.6 million (FY 2026/27) and $14.4 million (FY 2027/28) with one-time resources and short-term strategies. This includes the use of existing fund balance, Police Development Impact Fee, and increasing the vacancy factor, all of which are illustrated in Table 1 below.
Table 1
FY
2026/27
FY
2027/28
Resources:
General Fund
$138,438,580
$143,997,980
Measure E
18,326,800
18,764,300
Measure G
36,305,900
37,186,900
Total GF Resources
193,071,280
199,949,180
Appropriations:
Operating Expenditures
Allocation to Maintain the 12% Reserve Level
205,201,689
1,433,603
213,554,771
820,954
Total Appropriations
206,635,292
214,375,725
Imbalance
(13,564,012)
(14,426,545)
Budget Balancing Strategies:
Fund Balance
4,016,222
3,947,645
Reallocate CIP
580,689
0 Police Develop Impact Fee
1,234,000
2,467,000
Vacancy Factor
7,733,100
8,011,900
Total Budget Balancing Strategies
13,564,012
14,426,545
At the budget meeting, City Council expressed interest in funding certain programs and initiatives, most of which were included as Attachment D to the budget staff report.
At the August 11, 2026, Finance Committee meeting, staff presented these initiatives, how they could be funded, and the potential to fund additional infrastructure. The Committee provided direction to staff and made recommendations to move forward for City Council consideration. Staff’s presentation and Committee Members’ recommendations are detailed below.
Park Staffing
The City increased its parks and open space acreage by an additional 66 acres with the acquisition of Ensen Community Park Restoration Area. This creates a need to add capacity to ensure parks and open spaces are appropriately maintained 7 days per week. There are currently 16 full-time staff members ranging from Parks Operations Manager to Park Maintenance Worker servicing 253.8 acres of park space. This equates to 15.9 acres for every full-time position. With the addition of 66 acres for a total of 319.8 acres, each full-time position will be serving 20.0 acres. At the budget meeting, City Council discussed the potential of adding a Sr. Park Maintenance Worker ($129,400 ongoing) and/or a Park Maintenance Worker ($113,900 ongoing).
Staff provided three alternatives to fund additional park staffing – 1) add both positions now, 2) add one now and one at the mid-year process, or 3) add both positions at the mid-year process. Finance Committee Members recommended adding both positions now and funding them with General Fund – Fund Balance (fund balance).
Community Organization Contributions
For those items that include a City contribution to an organization such as Ciclovia and Monterey Waterkeeper, staff provided three recommendations – 1) refer Ciclovia to apply through the Community Sponsorship Program and maintain the program budget at $150,000, 2) refer Ciclovia to the Community Sponsorship Program and increase the program budget to $200,000 to increase capacity and fund more organizations, or 3) provide a direct contribution to Ciclovia. The Finance Committee recommended increasing the Community Sponsorship Program budget by $50,000 and refer those organizations to apply through the program. Staff recommend using fund balance to fund the additional $50,000.
Neighborhood Grants
In the current fiscal year, City council approved an allocation of funds for beautification projects in the amount of $42,000, to be equally distributed at $6,000 to each Council District and the Mayor’s office. In the prior year, there was a remaining balance of $800.
At the budget meeting, there was a request by Council to double this funding. However, the Finance Committee did not recommend additional funding for the Neighborhood Grants program at this time. It was noted that they would like to include a review of the program during the mid-year budget process. This approach allows for a more comprehensive evaluation of the program’s needs and effectiveness before any further funding decisions are made.
Small Business Grants
In 2023, City Council approved a small business grant budget of $75,000 for the Alisal area and $30,000 Citywide. These grants go towards miscellaneous business financial expenses, social media, or financial/computer literacy. Combined, there have been about $37,084 expended and currently there is $67,916 budgeted and available ($51,238 for Alisal and $16,678 Citywide) for future small business grant opportunities.
At the budget meeting, Councilmembers expressed an interest in doubling the allocation for the Small Business Grant Program, which would increase the funding to $105,000 and make the grants available Citywide. The Finance Committee members do not recommend this item for additional funding at this time and requested that this program be revisited during the mid-year budget review process. This approach allows for a more thorough evaluation of the program’s effectiveness and funding needs before making any additional allocations.
Rental Assistance
In December 2025, City Council authorized the launch of the Pilot Rental Assistance Program (RAP) to prevent homelessness through short-term rental assistance, housing stabilization services, and eviction prevention interventions. This program is designed to address both immediate housing crises and long-term housing stability, reducing inflow into the homeless services system. The City partnered with Eden Council for Hope and Opportunity (ECHO) and the Monterey County Office of Education (MCOE) to administer the program.
The City and ECHO Housing expanded homeless prevention efforts through community education on tenant rights, fair housing, and rental assistance resources. This partnership allowed the City to increase capacity. In FY 2025/26, the City and ECHO held multiple community meetings to increase awareness of housing protections, eviction prevention resources, and available housing assistance programs.
In the current plan, rental assistance will be provided using the current General Fund appropriation of $500,000 and $200,000 from Family Homeless Challenge (FHC) Grant. FHC funds must be spent by September 30, 2026. From staff's perspective, no additional program funding is needed at this time. Should program funding be exhausted over the next six months, staff can come back to request additional appropriation at mid-year or for FY 2027/28. The table (Table 2) below details the funding amount by program.
Table 2
Funding Source
MCOE
CITY/ECHO
Total
General Fund
$300,000
$200,000
$500,000
FHC (grant)
$200,000
$0
$200,000
Total
$500,000
$200,000
$700,000
Infrastructure Improvement Initiatives
In addition to the previously discussed items, staff are actively exploring further opportunities to deliver greater and more immediate improvements to the City’s infrastructure. This research has been guided by ongoing community and Council input and feedback, highlighting areas of concern and prioritizing needs.
As a result, staff recommend focusing efforts on four key infrastructure areas: striping, lighting, pothole repairs, and trees. These are essential for enhancing public safety and improving overall quality of life within the City. By utilizing infrastructure reserves, there is potential to expand the scope of work in these areas, providing a meaningful impact in a timely manner.
While specific recommendations for certain locations are included within this report, staff continue to evaluate other areas throughout the City to identify opportunities for high-impact improvements. The ongoing review ensures that resources are allocated efficiently and that safety remains a top priority in all infrastructure initiatives.
Striping
There are several advantages with striping. The City has a contract and purchase order in place. The previously scheduled work is expected to begin in September. Staff will need to work with the contractor to coordinate availability should this option be approved by City Council.
The segments on East Market Street, East Alisal Street, Williams Road, and East Boronda Road are recommended for striping and have an estimated cost of approximately $200,000. Other segments are being identified and will be included in the scope of work. Selected streets have the highest ADT (average daily trips) from the 2025/2026 prioritization project list that are not being addressed. The work is expandable due to the prioritization list having been previously approved by City Council and ADTs identified. Striping work can be performed relatively quickly with minimal traffic impacts and would ultimately increase safety in those identified areas.
The current proposed striping would address four (4) additional street segments from the 45 previously identified. Currently, the contractor is scheduled to restripe eleven (11) street segments. Staff will work with the contractor for additional segments identified.
Street Lighting
In 2026 to date, staff has completed streetlight repairs on eleven (11) street sections as follows:
Freedom Blvd (Constitution to Nogel)
Wood St (San Benito St to Santa Maria St)
Roy Diaz St (Airport Blvd to Freeway)
E Alisal (Work St to N Madeira Ave)
Sanborn Rd (Elvee Dr to Abbott St)
Work St (Sanborn Rd to John St)
Independence Blvd (Constitution Blvd to Lexington St)
Laurel Extension (Sanborn Rd to Natividad Rd)
E Market St & Front St
E Market (Pajaro St to Market Way)
Front St (E Alisal to E Market St)
Street lighting in several locations is recommended for funding due to low visibility within those areas. The eleven (11) identified locations listed in the following table are projected to cost approximately $400,000.
Other locations are being identified and will be included in the scope of work. As with striping, this would significantly improve safety and can be performed relatively quickly with minimal traffic impacts.
Potholes
Staff has addressed pothole issues throughout the City, completing repairs on 11,594 potholes across 2,072 different locations. Some of the streets included in these efforts are Abbott Street, East Boronda Road, Monterey Street, Old Stage Road, North Sanborn Road, Adams Street, Rainier Drive, Sequoia Street, West Laurel Drive, among others. To continue improving road conditions, staff is currently identifying the most critical potholes that require attention. It is recommended that $400,000 be allocated to support this ongoing repair initiative. “Adopt a Tree” Project
Staff is actively exploring ways to address 190 locations as part of the "Adopt a Tree" project. At this time, there are 70 outstanding requests waiting to be fulfilled. The estimated cost for implementing this initiative is approximately $100,000. Staff will continue to identify appropriate locations should this item be approved by City Council.
The table (Table 3) below outlines specific streets or locations and approximate cost for striping, lighting, and potholes.
Table 3
Location
Amount
Striping locations include (not a comprehensive list):
E. Market St.
E. Alisal St.
Williams Rd.
Boronda Rd.
$500,000
Street Lighting locations include (not a comprehensive list):
374,000
Sanborn Rd.
Nantucket Blvd.
E. Market St.
Constitution Blvd.
Rossi St.
Williams Rd.
Bernal Dr.
Quilla St.
Hebbron St.
Abbott St.
Solar lights:
Elvee Dr.
126,000
Potholes (to be determined):
400,000
Adopt a Tree Project (to be determined):
100,000
Total
$1,500,000
Additional Infrastructure Inquiry
At the August 11, 2026, Finance Committee meeting, a Councilmember requested that staff review the feasibility of installing a Rectangular Rapid Flashing Beacon (RRFB) at East Laurel Drive and Granada Ave. The estimated cost of the project is approximately $750,000-$800,000. Staff will continue to review the feasibility of this important inquiry.
Should the additional infrastructure investments discussed in this staff report be approved, staff recommend funding them with the Infrastructure Reserve. It is important to note that the use of specific reserves, including the Infrastructure Reserve, must be approved by a two-thirds vote (5 of 7 Councilmembers). Additionally, any such uses of the reserves are to be repaid over a period to be determined by Council at the time of approval, with a target repayment period of no more than three years. The three-year repayment may be suspended, in whole or part, if financial or economic circumstances are determined by the City Manager to prevent meeting this timeline.
Staff have conducted a thorough review of the additional needs brought forward by City Council, along with recommendations provided by the Finance Committee. The Finance Committee's specific recommendations are now being presented in this staff report for City Council consideration and potential action.
As noted in the Budget Transmittal Letter, there continue to be fiscal challenges, and prudent budgetary practices will need to be adhered to in order to ensure service delivery aligns with budgetary capacity.
CEQA CONSIDERATION:
Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
CALIFORNIA GOVERNMENT CODE §84308 APPLIES:
No.
STRATEGIC PLAN INITIATIVE:
An update of the fiscal year 2026/27 budget achieves the City Council 2025 Strategic Goal of City Services ensuring fiscal responsibility and financial management. The Strategic Plan can be viewed at: salinas.gov/strategic plan DEPARTMENTAL COORDINATION:
This staff report was coordinated with the City Manager, City Attorney, Public Works, and Finance.
FISCAL AND SUSTAINABILITY IMPACT:
Funding the recommended items in this report will reduce the estimated fund balance as follows:
Projected Biennial Budget Fund Balance
$1,092,522
Sr. Park Maintenance Worker (Year 1 & Year 2)
(258,800)
Park Maintenance Worker (Year 1 & Year 2)
(227,800)
Community Sponsorships
(50,000)
Projected Remaining Fund Balance
$555,922
Funding for the additional infrastructure investment will reduce the reserves as follows:
Reserves
Current
Recommended
Remaining
General Fund
24,385,309
24,385,309
OPEB
10,000,000
10,000,000
Infrastructure
4,600,000
(1,500,000)
3,100,000
Facilities Maintenance
1,500,000
1,500,000
Total
40,485,309
(1,500,000)
38,985,309
Reserve % of GF Expenditures
21%
20%
Fund
General Ledger Number (Operating/CIP)
General Ledger Account Name
Remaining Budget Appropriation
Amount Requested
1000-1200
35.0000
Projected Fund Balance
$1,092,522
$555,922
1000-1200
38.0195
Infrastructure Reserve
$4,600,000
$1,500,000
ATTACHMENTS:
Resolution
PowerPoint
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Total appropriation and reserve allocation were reduced by the development impact fee and vacancy factor. [$206,635,292-$1,433,603-$1,234,000-$7,733,100 = $196,234,589] Total appropriation and reserve allocation were reduced by the development impact fee and vacancy factor. [$214,375,725-$820,954-$2,467,000-$8,011,900 = $203,075,871] These are for additional locations on E. Market St. and Sanborn Rd.
Because this street is very isolated at night, it is a prime location for a pilot for the use solar lights.
Government Financial Officers Association (GFOA) recommends local governments maintain a general fund reserve level of no less than 2 months or 17% of operating expenditures. The City’s 20% level exceeds this recommendation for the General Fund.
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