17.78 Page | 3
Cc: Matt Huffaker, City Manager
Nathan Nguyen, Public Works Director
Members of the Transportation and Public Works Commission:
Susan Gilchrist, Vice Chair
Ron Goodman
Scott Harriman
Kyle Kelley
Dustin Mulvaney
Carlina Rose
17.79 City Council
AGENDA REPORT
DATE: 05/07/2026
AGENDA OF: 05/26/2026
DEPARTMENT: Finance/City Manager
SUBJECT: Fiscal Year 2027 Proposed Budget (FN/CM)
LOCATION: Citywide
RECOMMENDATION: Conduct the Fiscal Year (FY) 2027 Budget Hearings, receive information from staff for the City’s requested budget across all departments, the Enterprise Funds, and the Capital Investment Program, and provide feedback for preparation of the FY 2027 Adopted Budget.
BACKGROUND: The City Charter requires the City Manager to annually prepare the proposed budget for the start of the new fiscal year and transmit it to the City Council at or before its first council meeting of June. The FY 2027 Proposed Operating Budget and Capital Investment Program (CIP) Budget (hereafter referred to as the Proposed Budget) were posted to the City’s website on May 15, 2026. This document can be accessed online at https://www.santacruzca.gov/Government/City-Departments/Finance/City-Budget/Fiscal-Year2027-Budget, at the City Clerk’s Office at 809 Center Street, Room 8, and at the Downtown Library.
The Arts Commission received the City Manager’s recommendation for Public Works and Water CIP projects to be excluded from the Public Art transfer calculation for FY 2027. One attachment to this agenda report is the City Manager’s recommendations as they were presented to the Art Commission on March 11, 2026.
The Parks and Recreation Commission annually reviews the budget for the Parks and Recreation Department. The Commission met on April 13, 2026 at a publicly noticed meeting and reviewed the Parks and Recreation Department’s budget. Attached is a letter from the Chairperson of the Commission regarding the Proposed Budget.
The Planning Commission held a Public Hearing during its regularly scheduled meeting on May 7, 2026 and passed a motion to find that the 2027-2031 proposed CIP was consistent with the General Plan 2030. The General Plan Policies in Support of New CIP Items table file, attached, was also included in the agenda packet provided to the Planning Commission to assist in making this determination.
17.80 The Transportation and Public Works Commission (TPWC) annually reviews the operating and CIP budget for the Public Works Department. The Commission met on April 20, 2026 at a publicly noticed meeting and performed a review of the Public Works Department’s operating and CIP budget. The Chairperson of the TPWC is drafting a letter to the City Council regarding the Proposed Budget which will be presented to City Council in the agenda report for the FY 2027 Budget Adoption in June.
The Water Commission annually reviews the budget for the City of Santa Cruz Water Department and makes recommendations to the City Council. The Commission met on May 4, 2026 at a publicly noticed meeting to perform a detailed review of the Water Department’s operating and CIP budget and its financial position. A letter from the Commission on its recommendations related to the Proposed Budget will be provided in the agenda report for the FY 2027 Budget Adoption in June.
DISCUSSION: Following a collaborative citywide process involving all City departments, a Proposed Budget was drafted in alignment with the City’s Long-Range Financial Plan to resource the core services of the City’s departments, to address capital needs of the City, and to advance the 2023-2028 Citywide Strategic Plan. The Proposed Budget has a citywide expenditure budget of $479,730,718 and a General Fund expenditure budget of $169,757,007.
The total General Fund CIP budget is $29,158,221, with the citywide CIP totaling $69,193,160.
There is an additional $4,898,000 budgeted for vehicle and other capital equipment across the City’s funds.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:
Adopting the General Fund operating budget, the Capital Investment Program budget, and the budgets of the enterprise funds for fiscal year 2027 is not considered a “project” under CEQA Guidelines Section 15378(b). (“Project does not include . . . (2) Continuing administrative . . . activities, such as . . . general policy and procedure making . . . [or] (4) The creation of government funding mechanisms or other government fiscal activities . . . [or] (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.”) Note that adopting these budgets does constitute approval of any specific project, nor does it commit the City to any specific project.
HEALTH IN ALL POLICIES (HiAP): The FY 2027 Proposed Budget furthers the City in its steps towards meeting its Health in All Policies (HiAP) goals. The ways in which the City’s departments work and endeavor to meet HiAP goals are displayed in the budget document, with accomplishments, goals, performance measures, and workload indicators that are connected to HiAP pillars marked with a respective icon for equity, public health, and sustainability. City staff incorporated HiAP goals into the CIP prioritization process. The CIP projects that had a moderate or substantial impact on furthering HiAP goals were given additional points in the scoring process, which made them more of a contender to receive funding from the General Fund than if the project had no or only a slight impact on these goals.
17.81 FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: Yes
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The FY 2027 Proposed Budget includes $479,730,718 of total appropriations. Included in the operating budget is the City’s Primary General Fund of $169,757,007, which supports clean, safe, and resilient neighborhoods, emergency response, housing and homelessness services, and access to community resources and recreational programs and the internal services that support the execution of those endeavors. The total Capital Investment Program is $69,193,160, which supports the City’s natural and built infrastructure to be more resilient and supports the City’s livability and economic recovery.
Prepared By:
Emily Burton
Finance Manager
Submitted By:
Elizabeth Cabell
Finance Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. PUBLIC WORKS FY27 PUBLIC ART CIP EXEMPTIONS.PDF
2. WATER DEPARTMENT FY27 PUBLIC ART CIP EXEMPTIONS.PDF
3. LETTER - PR COMMISSION TO CITY COUNCIL - FY 2027 PROPOSED BUDGET.PDF
4. GENERAL PLAN POLICIES IN SUPPORT OF NEW CIP ITEMS.PDF
17.82 Brittany Inclan
From: Samantha Zenack <[email protected]>
Sent: Thursday, May 21, 2026 2:34 PM
To: City Council
Subject: My story: Please fund safer streets in this year’s budget Hello Mayor and Councilmembers, I live in the older Staff and Faculty housing on the campus. I’m concerned we’re not moving fast enough to make our streets safe for people walking, biking, and using mobility devices. This matters to me because: I drive up and down Bay Street daily and saw the aftermath of the accident that gravely injured a UCSC student at the Meder St intersection. As you finalize the budget, please invest General Fund dollars into quick-build safety projects—including protected bike lanes, safer crossings, and traffic calming. Thank you, Samantha Zenack
17.83 1
Julia Wood
From: Garrett <garrettphilipp@ aol.com>
Sent: Thursday, May 21, 2026 9:59 PM
To: City Council
Subject: agenda item #17 2027 budget
agenda item #17 2027 budget
Dear Council,
Once again we see it doesn't matter how many times it is explained how wrong you are to you, you just don't care, in fact prefer to rip the public off it seems over and over.
There are two tings wrong with transferring water fund monies to CIP art.
First is that it is not a property relaced charge, for instance art on the Bethany culver overpass is not water department property.
Second ALL monies that fund the water fund pay the 3% Franchise tax, and that tax is only to be levied on charges for water delivered, of which future art project will deliver none. Your Franchise tax then on money to pay for this art will be illegally obtained.
Of course there are TAXES all over the place in the general fund that can be used to pay for public art.
But you prefer to stick it to water users to pay for art because you can just raise water rates and there is little they can do.
Perhaps a Cabo San Lucas vacation for the entire city staff and council could be paid for BY TRANSFERRING MONEY OUT OF THE WATER FUND INTO A CITY PARTY FUND?? Now there's an idea.
It' s just stealing by any name. YOU HAVE NO SHAME. YOU LACK ETHICS.
Garrett Philipp
17.84 2
Julia Wood
From: Ben Freudberg <ben.freudberg@ gmail.com>
Sent: Friday, May 22, 2026 8:38 AM
To: City Council
Subject: My story: Please fund safer streets in this year’s budget Hello Mayor and Councilmembers,
I live in the westside of Santa Cruz. I’m concerned we’re not moving fast enough to make our streets safe for people walking, biking, and using mobility devices.
This matters to me because transportation that doesn't rely on personal vehicles is greener, cheaper, healthier, space-efficient, and it promotes community.
As you finalize the budget, please invest General Fund dollars into quick-build safety projects—including protected bike lanes, safer crossings, and traffic calming.
Thank you,
Ben Freudberg
17.85 1
Julia Wood
From: Melissa Palmisciano <melissa.palmisciano@ gmail.com> Sent: Friday, May 22, 2026 10:02 AM
To: City Council
Subject: My story: Please fund safer streets in this year’s budget Hello Mayor and Council members,
I live in the Alta Vista neighborhood of Santa Cruz. I’m concerned we’re not moving fast enough to make our streets safe for people walking, biking, and using mobility devices.
This matters to me because traffic on Mission has gotten so bad and crossing as a cyclist or pedestrian is terrifying. As a driver, the current flashing lights for the crosswalks are hard to see.
As you finalize the budget, please invest General Fund dollars into quick-build safety projects—including protected bike lanes, safer crossings, and traffic calming.
Thank you,
Melissa Palmisciano
17.86 2
Julia Wood
From: Kevin Norton <kwnorton@ gmail.com>
Sent: Friday, May 22, 2026 1:00 PM
To: City Council
Cc: Bonnie Bush
Subject: FY2027 budget: $500k–$1.2M for safer streets, here's exactly where it comes from Dear City of Santa Cruz Councilmembers:
I hope you’re doing well.
I’m writing ahead of next Tuesday’s budget hearing with a specific, budget-grounded proposal: redirect $500,000–$1,200,000 in existing General Fund spending toward a Quick-Build Street Safety Program focused on protected crossings, traffic calming, and safer bike infrastructure.
After reviewing the FY2027 proposed budget, I believe there is a clear and defensible way to do this without cutting essential services or eliminating staff positions.
The strongest opportunities I found are:
1. Economic Development Trust Fund transfer — $500,000
The proposed budget transfers $500,000 from the General Fund into the Economic Development Trust Fund. The budget itself notes this transfer is discretionary and already reduced below the policy target because a full transfer “would have upset the balance” of the General Fund.
This is not a service reduction. No resident loses a program if this transfer is redirected. Eliminating this one transfer alone could fund a citywide Quick-Build Street Safety Program.
2. City Council Services & Supplies increase
The City Council’s non-personnel operating budget increases from $203,922 in FY2026 to $483,582 in FY2027 — a 137% increase in one year. The proposed budget does not appear to explain the increase in detail. Even a partial rollback could free up meaningful funding for safety infrastructure.
3. Arts and promotion line items — temporary reduction
The budget includes roughly $139,000 for arts and promotion programs, including SculpTour and arts festival support. These are worthwhile programs, but a temporary reduction could help fund immediate life-safety improvements during a fiscally constrained year.
4. Redirect a portion of existing streets funding toward quick-build safety I am not recommending reducing the $500,000 CIP-Streets transfer. Instead, Council could direct that a portion of those funds specifically support:
• protected bike lane striping
• curb extensions
• daylighting
• high-visibility crosswalks
17.87 3
• flex-post protection
• pedestrian safety upgrades
This would not require additional spending — only a policy direction.
5. Ocean Street Beautification funding
The budget still contains remaining funding for Ocean Street beautification work. Redirecting a portion of that money toward actual pedestrian and bicycle safety improvements on Ocean Street would better align with the corridor’s existing safety problems.
6. Enterprise Resource Planning (Project NATE) is asking for $977,514 in one-time general fund spending. Some elements are essential for payroll/financial integrity, but you can ask for a staff report breaking out “must-have” vs “deferable” ERP costs and propose redirecting any deferrable portion (even 150k–250k) to quick-build safety in FY 2027.
What this money could accomplish:
• The City’s HSIP11 project delivered flashing beacons, crosswalk upgrades, and curb ramps at five intersections for roughly $300,000
• Paint-and-post protected bike lanes can often be implemented for $25,000–$150,000 per corridor • The already-approved Traffic Calming Pilot Program remains unfunded at approximately $120,000 In practical terms, $500,000 could mean several new protected crossings and multiple quick-build safety projects this year instead of continued delay.
A few broader points I hope Council will consider:
• Public Works receives only 8.6% of net General Fund operating costs. The department responsible for the physical safety and functionality of our streets receives a relatively modest share of General Fund support despite transportation safety being one of the city’s most visible daily issues.
That’s a surprisingly small share compared with:
• Police: 36.4%
• Fire: 20.9%
• City Manager: 14.9%
• Parks & Recreation: 14.8%
• Federal transportation safety grants are increasingly uncertain. Locally funded quick-build projects do not depend on Washington.
• The City has already completed much of the planning work. The Active Transportation Plan, Traffic Calming Pilot Program, and several protected bike lane projects are already designed or approved. What is missing is implementation funding.
The General Fund is approximately $169.8 million. Redirecting $1–2M is about 0.6–1.2% of total spending, but would have an outsized impact on safety.
My request is straightforward:
17.88 4
Please consider proposing an amendment that redirects the $500,000 General Fund transfer to the Economic Development Trust Fund into a Quick-Build Active Transportation Safety account within Public Works, with staff directed to return within 60 days with a prioritized project list.
I also hope Council will consider directing a portion of existing streets and beautification funding toward active transportation safety improvements.
This proposal is fully consistent with the City’s Climate Action Plan, Health in All Policies framework, and Strategic Plan priorities around safe, people-centered infrastructure.
I’d be happy to share a longer budget analysis, connect you with constituents planning to speak Tuesday night, provide possible amendment language, or discuss any of these ideas further.
For convenience of scheduling, my Calendly link is: https://calendly.com/kwnorton. Or you can call or text me. Please let me know if there's any information you'd like me to send you.
Thank you for your time and for your service to the community.
Best,
Kevin
831-227-1789
17.89 Brittany Inclan
From: Christi Voenell <[email protected]>
Sent: Friday, May 22, 2026 8:24 PM
To: City Council
Subject: My story: please fund safer streets in this year’s budget Hello Mayor and Council Members,
I live in the upper westside neighborhood of Santa Cruz. I’m concerned we’re not moving fast enough to make our streets safe for people walking, biking, and using mobility devices.
This matters to me because: I was hit by a car while riding my bike when crossing a green light on Mission St. at the intersection with Swift St. My helmet saved my life, but the traumatic brain injury I sustained changed my life profoundly and impacts me to this day.
As you finalize the budget, please invest General Fund dollars into quick-build safety projects— including protected bike lanes, safer crossings, and traffic calming.
Thank you,
Christi Voenell
Upper westside District 6
17.90 Brittany Inclan
From: Garrett <[email protected]>
Sent: Saturday, May 23, 2026 11:54 AM
To: City Council
Subject: Agenda a Item #17 theft of water funds for art Agenda a Item #17 theft of water funds for art
Dear Council,
Yes, I know I wrote before about this, and have objected many times in the past as to your practice of syphoning off water charges to pay for public art, but don't take my word for it here for instance is what AI has to say about your practice which is to stick it to water users because it is easy instead of using properly using tax monies as you should. All your lame wanna-be explanations, probably written by lawyers to obscure how wrong it is, fall flat .
From AI,
"Property-related charges (often called property-related fees or charges) are a specific category of local government revenue, particularly in places like California under Proposition 218 (the "Right to Vote on Taxes Act" of 1996). They sit between general taxes and pure user fees.Key Characteristics of Property-Related Charges They are levies imposed "as an incident of property ownership" — meaning they're tied to owning or using a parcel of real property. Common examples include charges for water delivery, sewer service, garbage collection, and stormwater management that appear on monthly utility bills. Unlike general taxes (which fund broad government services and often require voter approval), property-related charges must meet strict rules:
They cannot exceed the reasonable cost of providing the specific service to the property owner.
Revenues must be used only for the service they fund (no diversion to unrelated purposes).
The service must have a direct relationship to property ownership and be available to the property.
Many require notice to property owners and an opportunity for protest (with some exceptions, like water/sewer/refuse, which have streamlined processes).
Taxes are compulsory payments for general public benefits (e.g., police, libraries, parks) with no direct link to a specific service received by the payer.
Fees are generally for voluntary or regulatory services (e.g., building permits, business licenses). Property-related charges are a subset of fees with extra constitutional protections and restrictions because they're tied to property.Using Water Department Revenue to Buy ArtNo, this would generally not be justified as a property-related
17.91 charge.Water department revenue comes primarily from property-related fees/charges for water service. Under Prop 218 and similar laws elsewhere:
These funds are restricted to the cost of providing water service (operations, maintenance, capital improvements for the water system, debt service, etc.). Using them for unrelated purposes like purchasing art (even public art) would violate the requirement that fee revenue not exceed the cost of the service and not be used for general governmental purposes.
Public art is typically a general benefit expense funded from the general fund (via taxes) or dedicated arts funds, not enterprise/utility funds like water/sewer.
Exceptions or workarounds (rare and legally risky):
Some cities have "percent for art" programs that take a small portion of capital project budgets (including utility capital projects). However, this is usually scrutinized and must still tie back to the utility's costs/benefits. Transferring "surplus" water revenue to the general fund is sometimes attempted but often challenged legally if it looks like a disguised tax or fee diversion.
Courts and Prop 218 enforcement emphasize that water/sewer/stormwater fees cannot subsidize unrelated city services. Diverting them to art would likely be seen as an illegal use of restricted funds.In short: Property-related charges are tightly regulated user fees for services directly linked to property. Water revenue is "dedicated" money and should stay within the water utility — using it for art crosses the line into general taxation territory without proper authorization. Cities usually fund public art through taxes, grants, or voluntary contributions instead." Now we get to see you, like trained clapping seals "aye,aye,aye", and approve these illegal transfers of water user funds as I'm quite sure you will since lack the ethics to do otherwise.
Garrett Philipp
17.92 Brittany Inclan
From: Rachel Grad <[email protected]>
Sent: Sunday, May 24, 2026 7:51 PM
To: Fred Keeley; Gabriela Trigueiro; Renee Golder; Sonja Brunner; Scott Newsome; Susie O'Hara; Shebreh Kalantari-Johnson; City Council
Subject: Funding Priority: Santa Cruz Needs Safer Streets! Dear Mayor and Councilmembers,
I am a Santa Cruz resident and I would like to advocate for more funding for safer streets in Santa Cruz. I regret that I am unable to attend the midday Tuesday meeting to make this request in person.
Safer Streets: Low-Cost, High-Impact
While Santa Cruz has many areas where investment is needed, safer streets may be one of the city’s highest-impact and most achievable areas for improvement.
For residents and visitors, the roadway shapes our daily experience. Whether walking, biking, or driving, many of our streets are stressful, crowded, and unsafe. Safer streets hit every constituency and interest, from the full time residents like myself to the visitors our economy depends on.
My Story
In 2018, I was biking on West Cliff (on the roadway) and was hit by a Santa Cruz City Schools van towing a trailer. The driver simply made it around me, but didn't leave enough room for the trailer to pass me in the tight roadway. I careened into a guardrail and had minor injuries, which I'm sure you can imagine I was happy to escape with, as worse could have happened within inches.
At the same time, anyone who has walked West Cliff with an elderly parent or stroller knows that bikes on the sidewalk just don't work for any of us.
Question
If one can't safely walk, bike, or drive even on a roadway like West Cliff, one of our most iconic roads, are we adequately stewarding our city and natural features? Request
Please prioritize funding for quick-build safety improvements on West Cliff Drive and other high-conflict corridors, including clear and protected bike infrastructure where feasible. These are practical, visible improvements that would make Santa Cruz safer, calmer, and more enjoyable for residents and visitors.
Gratefully,
Rachel Grad
131 Claremont Terrace
Santa Cruz, CA
415-385-8982
17.93 Brittany Inclan
From: Sara McLellan <[email protected]>
Sent: Monday, May 25, 2026 9:46 AM
To: City Council
Subject: Santa Cruz NOT SAFE for Bike Riders
Dear City Council,
I am not able to attend the city council meeting on Tuesday May 26 because I have to work. Please listen to Kevin Norton and others advocating for safer streets. If I was able to attend the meeting, then this is the statement I would give:
My experience is that cars are not stopping for bikes on the rail trail. At Swift street near New Leaf a car almost hit a woman and her dog. We need rumble strips or something to slow cars down. West Cliff Dr. is a street where cars are not respectful of bikes. I was riding by the entrance to Natural Bridges State Park and a car turned in front of me. I had to slam on my brakes and fall over. Once I was walking my dogs in the morning at Plateau. A kid on a bike was coming up Woodrow going towards Delaware Ave. A person in a car did not see the kid coming on the bike and almost hit him when turning left onto Woodrow from Plateau. On Delaware the street narrows at Surfside. A drunk driver once hit cars along Delaware, ran into out neighbor’s truck and pushed his truck into my husband’s car at 1516 Delaware, which pushed my husband’s car into my car. The kids who were drunk left their truck, which was damaged, and ran away. We need protected bike lanes along Delaware and neighboring streets so we can cycle safely to school and work. West Cliff Dr. should be a one way street with another lane designated for bikes. This is the safest thing to do. Riding along the path that is shared with pedestrians, roller skaters, families, and dogs is not safe because there is not enough room. Thank you for all the efforts you have made and are making to make Santa Cruz a safe place for everyone.
Sincerely,
Sara McLellan and family (Jon, Caitlin, Teagan, Sandra, TMike, Ian, Oscar, Jaojo, and Morty)
17.94 FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ FY 2027 Proposed Budget-The work of the City of Santa Cruz-General Fund Pillars -Investing in our People, Major Community Projects, and the Systems that Serve
-General Fund CIP-Enterprise Funds: Water and Public
Works Departments
17.95 The City’s Departments
City CouncilCity Attorney’s OfficeCity Manager’s OfficeCommunity DevelopmentFinanceFireHuman ResourcesInformation TechnologyLibraryParks and RecreationPolicePublic WorksWater FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Office of Economic DevelopmentHomelessness Response Team
17.96 A Morning in the Life
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ 6:00 AMGet ready
7:30 AM
Walk child to school
9:00 AMPick up coffee
9:30 AM
Travel to work
17.97 17.98
Utilizing General Fund Resources to Carry out
Council DirectionInvesting in our people, our major community projects, and the systems that serve our residents.
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.99 FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ FY 2025-FY 2027OPERATING GENERAL FUND
0 20406080
100120140160180
FY 2023 FY 2024 FY 2025 FY 2026
(estimated)
FY 2027
(proposed)
126.23
146.52
160.79 164.63 169.76
127.77
147.82
160.95 163.13 169.76
Revenue Expenses
17.100
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ FY 2027OPERATING GENERAL FUND
Revenue Budget By Source
Taxes, 113,924,290.49 ,
67%
Licenses and Permits,
2,893,200.00 , 2%
Grants,
1,074,453.59 ,
1%
Charges for Services,
41,307,630.32 , 24%
Fines and Forefeits,
1,536,996.87 , 1%
Miscellaneous Revenues,
6,326,589.49 , 4%
Other Financing Sources,
2,694,045.00 , 1%
17.101
Major Revenues Over Time
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ -
5.00 10.00
15.00 20.00
25.00 30.00
35.00 40.00
Property Tax including Transfer Tax Sales Tax Franchise & UUT Taxes Tourism-TOT, Parking Lot, Admission Millions
2022 2023 2024 2025 2026-Estimated 2027-Proposed
17.102
General Fund Revenue Analysis
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Strengths WeaknessesOpportunities Threats
- Tax fatigue - Upward pressures on prices may result in reduced consumer spending
- November 2026 ballot measures may overturn
Measure C and Measure Q
- Economic volatility and instability
- Voter-approved sales, property, and transfer taxes- Increased Lodging Occupancy Taxes (TOT)- Past investments in pension trust providing flexibility to absorb pension spike in FY 2027
- Expanding Utility Users’ Taxes to encompass
streaming services
- Utilization of Sugar-Sweetened Beverage Tax with
successful litigation
17.103
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ FY 2027OPERATING GENERAL FUND
Expenditure Budget By Use
Personnel Services,
100,872,477.23 , 59%
Services, Supplies, and Other
Charges, 60,490,168.47 , 36%
Capital Outlay, 661,097.00 , 0%
Debt Service, 1,766,725.18 , 1%
Other Financing Uses,
5,966,525.00 , 4%
17.104
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ FY 2027OPERATING GENERAL FUND
Non-Departmental,
7,483,475.04 , 4% City Council, 1,016,277.78 ,
1%
City Manager,
22,074,541.97 , 13% City Attorney,
641,500.00 , 0%
Human Resources,
2,964,524.30 , 2%
Finance, 5,604,185.50 , 3%
Information Technology,
8,071,196.20 , 5%
Police, 41,774,573.87 , 25%
Fire, 29,715,881.53 , 18%
Parks and Recreation,
20,988,827.19 , 12%
Library (City), 3,303,600.00 ,
2%
Public Works,
15,634,343.74 , 9%
Community
Development,
10,484,065.76 ,
6%
Expenditure Budget By Department
17.105
All for the low, low price of $7.43
Affordable housing development, safe buildings, sensible land use planning Community Services & Sustainable Infrastructure ($1.77) Police patrols, investigations, fire protection, emergency preparedness and disaster recovery services Public Safety ($3.13)
City governance, policy development, public wi-fi, access to City employment, reliable financial reporting Leadership & Support Services ($1.75)Debt Service and Transfers ($0.33)
23.8%
6.2%
42.1%
Community Development ($0.46)
Beach maintenance, public parks, street maintenance, sidewalk repairs, trash and recycling in public areasMaintenance of key infrastructure, equipment, and financial stability $169.8M
23.5%
4.5%
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.106
Investing in Our People
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ -
10.00 20.00
30.00 40.00
50.00 60.00
70.00 Salaries Benefits
Millions
2022 2023 2024 2025 2026- Estimated 2027- Proposed
Competitive compensation
packages to attract and retain a highquality, productive workforce result in year-over-year
funding commitments.
34% increase
72% increase
MT1
17.107
Slide 13
MT1 Were we going to keep the 34% and 72% increases? I know we talked about removing from one of the slides but not sure if it was this one.Michelle Templeton, 2026-05-18T16:24:28.604
17.108
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.109
Investing in Our Systems
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
30.00 35.00
40.00 45.00
50.00 55.00
60.00 65.00
Services, Supplies, Materials, and Capital Outlay
Millions
FY 2025 Actuals FY 2026 Estimated FY 2027 Proposed
Operational costs remained stable, with investments limited to our enterprise resource program, current contracts, and expanded insurance costs and tools.
17.110
Investing in Our Systems
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZLegacy system Modernized system Emailing PDF files for signature
Internal workflow with dashboard notifications
Manually matching system activity with bank statement
Employees use multiple systems to manage personnel information and gather financial data AI tools matching data with City staff verifying
One stop shop for employees
$471k Citywide annual cost $866k Citywide annual cost (~85% increase)
17.111
Investing in Major Community Projects
Expenditure Budget: $69.19M
Citywide By Department
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ City Manager, $19.51M
Information Technology, $2.57M
Fire, $0.62M
Parks & Recreation, $1.62M
Police, $0.73M Public Works - General Fund,
$5.79M
Public Works - Stormwater, $0.05M
Public Works - Refuse, $2.89M
Public Works - Wastewater, $10.00M
Water, $25.42M
17.112
Investing in Major Community Projects
General Fund
CIP
expenditures
increased
500%
comparing FY
2021 and FY
2026.
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ -
10.00 20.00
30.00 40.00
50.00 60.00
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Actual
FY 2025
Actual
FY 2026
Estimate
Millions
Average
expenditures
for 10 fiscal
years prior to
FY 2021 were
$6.5M.
17.113
Investing in Major Community Projects Revenue Budget: $29.90M General Fund CIP By Source
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Operating General Fund, $2.68M
Miscellaneous Revenue, $0.48M
Other General Funds, $3.79M
Parks & Recreation Facilities Tax Fund, $2.30M
City Enterprise Funds, $1.19M
Transportation Funds, $1.32M
Measure S, $10.46M
Successor Agency contributions, $0.15M
Public Safety Impact Fee Fund, $0.30M
Traffic Offender Fund, $0.20M
State Capital Grants, $7.03M
91% of the revenues funding General Fund CIP projects are derived from a source outside the Operating General Fund.
Grants account for 24% of the General Fund CIP project revenue sources in FY 2027.
17.114
Harvey West Ballfield Plans
Sand Trap & Tee Renovations
Oceanview Park Renovations
OCEANVIEW PARK
REDESIGN
TYRELL PARK
IMPROVEMENTS
RIVERSIDE
GARDENS
SAN LORENZO PARK REDESIGN
HARVEY WEST PARK
REDESIGN
WATER CONSERVATION
& IRRIGATION
$155,329
$150,000
$60,000
$253,250
$46,836
$30,000 $695,415
FY 2027 CIP Reprogrammed Budgets
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Lower DeLaveaga Park General Upgrades
17.115
General Fund CIP
2027-2031Presented by Public Works
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.116
Agenda
General Fund CIPProject Highlights
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.117
FY 2027 General Fund CIP
Funding Sources
• Enterprise Funds• ED Public Trust• Childcare Impact Fee• City Public Trust• Grants• Loans• Affordable Housing Trust Fund
• Private Contributions• Successor Agency
Contributions
• Parks & Recreation Tax• Quimby SW Quadrant• CDBG Fund• Traffic Offender Fund• PS Impact Fee – Police Fund
• Traffic Impact Fee• Measure D• Transportation
Development Act
• Gas Tax• Energy
Rebates/Incentives
• Road Maintenance
Account
• Liability Insurance Fund• IIG-AHSC Fund• FEMA Disaster Relief• City Stabilization Fund FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.118
FY 2027 General CIP Highlights
Fire• Lease payments for Two Fire Engines
$624,551
Police
• Police Report Writing Room Expansion,
Sergeant Office and Library $500,000
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.119
FY 2027 CIP Parks and Recreation
Harvey West Ballfields
Plans and Designs
Oceanview Park Improvements
Jessie Street Marsh Restoration Ongoing
$5M+ Project
$408,250 $106,826
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Wharf Resilience Projects Ongoing
$7M+ Project
17.120
FY 2027 CIP Economic Development
Downtown Library, Parking Garage & Affordable Housing
Behavioral Health Continuum Infrastructure Project (BHCIP) Ongoing $60M Projects(Full Project Cost $150M+ ) $300,000 - Predevelopment Costs (Full Grant $30M)FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.121
FY 2027 CIP Public Works
Murray Street Bridge West Cliff
Annual Paving Program Downtown Development
Riverwalk Lighting
Ongoing $60M Project $1,465,000
$500,000 Ongoing $12M+ Projects
$1M Projects
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.122
Traffic Safety
• Rail Trail Segments 8 and 9• Bay Corridor Complete Streets• Citywide Intersection Daylighting
• Water Street Protected Bike
Lanes
• Unsignalized Crossing
Improvements
• Advanced Dilemma Zone
Detection and Retroreflective Boarders
Major Citywide CIP Measure D Funding
Local share contributes to:• Bay Corridor Complete
Streets
• Water Street Protected Bike
Lanes
• Swanton Boulevard Multi-use
Path
• METRO Rapid Corridors• Soquel/Morrissey/Water
Intersection
Vision Zero Focus
Active Transportation Plan
& Safety Action Plan
Planning documents to prioritize walking, biking, and roadway safety.• ATP - Adopted April 2026• SAP – TPWC in August 2026• SAP – Council Adoption Fall 2026 Vibrant Downtown
• Pacific Beach Roundabout
Safety Enhancements
• Laurel Street Surface Seal and
Vision Zero Striping
• Downtown Expansion Plan –
Plan Lines
• Riverwalk Lighting and
Pathway Rehabilitation
• Go Santa Cruz Programs
• 99% Grant/non-General Funding• $29 M (Transportation Projects)• Inter-departmental coordination (PD/FD/PW/CMO-ED/P&R/PL)
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.123
FY 2027 Enterprise Funds
FY 2027-2031 Enterprise CIPPresented by Water and Public WorksFY 2027 Enterprise Funds and FY 2027-2031 CIP
17.124
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Agenda
Water Department
Public Works
Parking Refuse Stormwater Wastewater
Questions and Answers
17.125
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ AGENDA
Mission & PrioritiesInvestments in People & SystemsWater System ReliabilityFY 2027 Revenue & OperationsInvesting In Projects & FY 2027 Capital Budget Request WATER ENTERPRISE FUNDSInvesting in Operations & Infrastructure
17.126
Mission
Ensure public health and safety by providing a clean, safe, and reliable supply of water. We strive to serve the community in a courteous, efficient, cost-effective, and environmentally sustainable manner.
Priorities Water System Reliability: Securing Water Supply, Adapting to Climate Change, Investing in Aging Infrastructure, Maintaining Natural ResourcesFinancial Security: Ensuring Financing for Operations, Capital Projects and Our PeopleOrganizational Health: Creating Meaningful Work Environment, Enhancing Customer Experience, Strengthening Efficiencies FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.127
Investing in our People
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Classification and Compensation Studies throughout the DepartmentMOU Salary and Benefit IncreasesOngoing Onboarding of New & Existing Staff with focus on training and developmentAll-Hands meetingsTrades Day & Skilled Jobs Fair
17.128
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Investing in our Systems & Customers Utility Billing System Santa Cruz Municipal Utilities (SCMU) provides billing and customer service for the City’s three utilities:
RefuseWastewater
Water
Partnering with PW for the replacement of the current billing work order system, and customer portal systems with SpryPoint. This includes the integration of these systems with fourteen other systems. Golive slated for October 5th.
17.129
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Investing in our Systems & CustomersUtility Customer Assistance Program (UCAP) Single Family Residence (SFR) ProgramProgram Inception: March 2025Enrollment to Date: 558 72% Inside City Customers28% Outside City Customers53% Rent their home47% Own their home52% Household size is 1-2 people31% Household income is $20k or less Multi Family Residence (MFR) Program
Program Inception: March 2026Enrollment to Date: 315
73% Inside City Customers27% Outside City Customers88% Rent their home12% Own their home82% Household size is 1-2 people56% Household income is $20k or less
17.130
Water System Reliability
17.131
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Total Revenues = $ 61,325,283
Funding Sources
• 98% charges for service• Grants
Total Operating Budget = $ 57,732,391
7% increase from FY 2026 AdoptedTotal FTES = 127.25, 8% vacancy rateIncreases • People: MOU implementation • Electricity costs increased over $ 900k• Debt Service = $ 10,576,801 38%
41%
19%
2%
FY2027 Operating Budget
By Objects of Expense
PersonnelServices, Supplies, &OtherDebt ServiceCapital Equipment FY 2027 Revenues & Operating Budget
17.132
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Investing in The Water System
17.133
Investing in Projects
Data from 7/1/2017 through 12/31/2025
Number of Completed
Projects
The Santa Cruz Water Program was launched in 2018 with the vision to build a 21st century water system for our community and the environment.
Amount Invested in
Projects
Completed/Post-Construction Highlights:
Newell Creek Dam Inlet-Outlet ReplacementLaguna Creek Diversion RetrofitMeter Replacement Project$13.5M in Water Main ReplacementsCoast Pump Station Raw Water PipelineUniversity Tank No. 5 ReplacementGraham Hill Water Treatment Plant Filter Rehabilitation Amount Funded with Grants
& Low-Interest Loans
23 $287.2 M
$166.9 M
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.134
$25,420,000
FY 2027 Water CIP Budget Request
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ Graham Hill Water Treatment Plant (GHWTP)Facility Improvements Project (FIP)Construction: 1/2027 – 12/2031 Water Supply Augmentation ProjectConstruction: 7/2028 – 6/2036 Beltz Well 8 Aquifer Storage & Recovery UpgradesConstruction: 8/2026 – 4/2027 Newell Creek Pipeline –GHWTP/FeltonConstruction: 2/2025 – 2/2027
17.135
FY 2027-2031 Projected Budget
Total: $307,441,987
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.136
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ In Closing
The Water Department’s budget reflects our ongoing commitment to investing in our people, strengthening our community, and delivering critical projects — while responsibly navigating the financial pressures facing our residents and our organization.
17.137
PUBLIC WORKS ENTERPRISE FUNDS
Operating and CIP AGENDA FY 2027 Enterprise
BudgetsPW Enterprise PersonnelDeep Dive:
ParkingResource RecoveryStormwaterWastewater
CIP Challenges
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.138
Public Works – Operating and Capital
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.139
Enterprise Regular (PTE/FTE) Current Vacancy Rate
1%2%6%
47.1 100.5
56.8 ParkingResource RecoveryWastewater
Investing in our People…
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.140
Wastewater
FY 2027
$35 M
$30 M
$12 M
Operating Expenditure
Revenue
Capital & Debt
• Begin Progressive Design Build on Project
WEER
• Secure Project WEER financial solutions for
$96M of anticipated costs
• Continue to operate T22 tertiary treatment facility
and new source pump station (Pure Water Soquel)
• Ensure environmental compliance and monitor
outfall effluent (NPDES Permit)
• Continue Succession Planning • Complete WWTF Headworks project• Video inspect collection system mains Investing in our Community…
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.141
Resource Recovery
FY 2027
$27 M
$30 M
$5.2 M
Operating Expenditure
Revenue
Capital & Debt
• Complete permanent enclosed flare station at
the Resource Recovery Facility
• Hire vacant Public Works Operations Manager
position
• Continue support on Project NATE Utility Billing
program transition (paperless work orders)
• SB54 Regulatory Impacts
• Celebrate Resource Recovery Facility’s
Centennial
• Begin Refuse Rate study FY28-32
Investing in our Community…
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.142
Parking
FY 2027
$7,496,946
$7,802,647
$1,766,813
Operating Expenditure
Revenue
Capital & Debt
• Evaluate operations and complete service
for improvements
• Review revenues for events, parklets, leases
and other fees for cost recovery
• Complete Locust parking garage elevator
modernization
• Complete staff relocation to 123 Locust HQ
• Support Downtown Library, Parking Garage
and Affordable Housing project construction
• Transition to online residential parking
permit sales
Investing in our Community…
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.143
Stormwater
FY 2027
$916,000
$1,350,865
$446,025
Operating Expenditure
Revenue
Capital & Debt
• Begin Pump Station 1 and Soquel Pump Station
design work and seek construction funding
• SLR Culvert Debris Boom and River Mouth
Breaches
• Downtown Catch Basin project
• Complete analysis for improving Stormwater Fund
revenue
• Consider Citywide plan to increase revenues for
infrastructure O&M and Capital Improvements
• Annual USACE maintenance of the SLR levee• Continue FEMA Accreditation for reduce insurance rates
Investing in our Community…
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.144
Enterprise CIP Challenges
Aging Infrastructure
Investing in our Systems…
Big Plans and Projects
Big Bonds, Loans and Other Creative Funding Expensive Equipment and Long Lead Time Succession Planning Project and Funding Obligations
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.145
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ FY 2027 Proposed Budget-The work of the City of Santa Cruz-General Fund Pillars -Investing in our People, Major Community Projects, and the Systems that Serve
-General Fund CIP-Enterprise Funds: Water and Public
Works Departments
17.146
Questions and Answers
FY 2027 PROPOSED BUDGET PRESENTATION | CITY OF SANTA CRUZ
17.147
18.1 18.2
18.3 18.4