CITY OF SANTA MARIA
FY 2025-26
Budget Rebalancing Initiative
JANUARY 20, 2026
Recommendations
1. Receive and file the Fiscal Year 2025-26 Budget
Rebalancing Analysis.
2. Adopt a Resolution approving First Quarter Budget
Amendments to the FY 2025-26 Budget for personnel,
operational and capital changes.
General Fund and Measure U
• June 18, 2024:
– FY 2024-25 and FY 2025-26 Budgets Adopted
• FY 2024-25 adopted as balanced using short-term strategies – Use of one-time reserves from General Fund, Measure U, and Local Economic Augmentation Fund (LEAF)
• FY 2025-26 adopted as unbalanced due to budgeted depletion of General Fund and Measure U reserves in FY 2024-25
• City Council directed staff to return with long-term budget strategy recommendations to close ongoing budget deficit and avoid relying on use of one-time reserves
FY 2024-26 Adopted Biennial Budget
• June 3, 2025 FY 2024-26 Mid-Cycle Review
• FY 2025-26 General Fund appropriations (including Measure U) a gap of $25.1 million to be closed
• Adopted Actions (Use of $28.6 million in one-time funds):
1. Used General Fund reserves for unfunded liability pension payments:
$5.9 million + $25K for Homeless Encampment Cleanup
2. Used the balance of LEAF reserves: $22.7 million
o $14.4 million to balance General Fund
o $4.8 million to balance Measure U Fund
o Use of $3.5 million to balance General Fund Capital Projects Fund FY 2024-26 Mid-Cycle Review Budget Actions
• A Growing Gap…
General Fund & Measure U Forecast
• All City Departments engaged in a rebalancing initiative that develops a plan to address the structural deficit, entailing:
✓ Revisiting FY 2024-25 Year-End Estimates
✓ Departmental budget re-evaluation: review of all revenues and expenses ✓ Vacant Position evaluation: review of persistent vacancies and chilled positions
✓ Review Capital Outlay Project expenses that may be delayed or cancelled ✓ Establish a City Council ad-hoc committee
• More to Come:
– Departmental budget re-evaluation: review of all revenues and expenses – Financial/Budget Policy Review
– Revenue generation opportunity evaluation: evaluate potential revenue- generation initiatives
– Development of short- and long-term rebalancing initiatives that resolve the structural deficit and assist with strategic planning for the future Continued Budget Rebalancing Initiative
Department budget amendment submissions
DEPARTMENTAL BUDGET AMENDMENTS
Dept
Net General
Fund/Measure U
Submissions Amended Percent
Change One Time Ongoing Total Net GF/MU
CAO $ 1,975,752 $ - $ (405,346) $ (405,346) $ 1,570,406 -20.5% CMO 10,913,452 - (2,827,920) (2,827,920) 8,085,532 -25.9% CD 3,072,405 - (1,640,986) (1,640,986) 1,431,419 -53.4% FIN 3,592,917 - (711,773) (711,773) 2,881,144 -19.8% FD 25,412,574 (4,163,118) (1,450,582) (5,613,700) 19,798,874 -22.1% LIB 3,379,558 (25,600) (631,549) (657,149) 2,722,409 -19.4% PD 58,834,755 - (3,884,087) (3,884,087) 54,950,668 -6.6% PW 4,611,338
(896,649) (896,649) 3,714,689 -19.4%
RP 15,084,085
(3,336,223) (3,336,223) 11,747,862 -22.1%
TOTAL $ 126,876,836 $(4,188,718) $(15,785,115) $ (19,973,833) $ 106,903,003 -15.7%
SUMMARY
Targeted
Timing FTE LS
Revenue Increase
Revenue
Total
Expenditure Reduction
Expenditure
Total Total Impact
One-
Time On-going One-Time Ongoing
FY 2025-26 (24.00) (4.80) $ - $1,000,000 $1,000,000 $3,795,098 $7,699,300 $11,494,398 $12,494,398 FY 2026-27 (17.20) (0.48) - 841,147 841,147 393,620 4,847,521 5,241,141 6,082,288 Follow-up (9.00) (1.92) - - - - 1,397,147 1,397,147 1,397,147 (50.20) (7.20) $ - $1,841,147 $1,841,147 $4,188,718 $13,943,968 $18,132,686 $ 19,973,833
FY 2025-26 Department Budget Amendment
Submissions
PROPOSED DEPARTMENTAL BUDGET AMENDMENTS
FY 2025-26 Submissions Structural
Dept One-Time Ongoing Total Deficit
Structural Deficit $ 25,134,880 $ 25,134,880
City Attorney’s Office $ - $ (147,468) $ (147,468) $ (147,468) City Manager’s Office - (1,275,657) (1,275,657) (1,275,657) Community Development - (1,192,330) (1,192,330) (1,192,330) Finance - - - -
Fire (3,795,098) (1,450,582) (5,245,680) (1,450,582) Library - (494,480) (494,480) (494,480)
Police - (2,486,940) (2,486,940) (2,486,940)
Public Works - (380,662) (380,662) (380,662)
Recreation & Parks - (1,271,181) (1,271,181) (1,271,181) Total Submission $ (3,795,098) $ (8,699,300) $(12,494,398) $ (8,699,300) Deficit Remaining $ 12,640,482 $ 16,435,580
CANCELLED / DELAYED FY 2025-26 CAPITAL PROJECTS
FY 2025-26
Leisure & Cultural Services Adopted Amendment Amended
Pocket Parks $ 1,000,000 $ (1,000,000) $ -
Preisker Park Pond Liner
Rehabilitation
600,000 (600,000) -
ADA Access Installation at
Simas Field
600,000 (600,000) -
Fletcher Park Irrigation
Upgrades
100,000 (100,000) -
Pool House Rehabilitation 351,200 (351,200) -
Replace Aging Shades & Sun
Screens at City Parks
30,000 (30,000) -
RV Hookup for Park Hosts 350,000 (250,000) 100,000
Sign/Façade Restoration
Program
150,000 (150,000) -
Elks Field Lighting 1,500,000 (1,300,000) 200,000
Total $ 4,681,200 $ (4,381,200) $ 300,000
Capital Projects
General Fund and Measure U Status
FUND ANALYSIS – GENERAL FUND & MEASURE U
(in thousands)
FY 2024-25
Estimates
FY 2024-25
Actual
FY 2025-26
Adopted
FY 2025-26
Amended
FY 2025-26
Proposed
Beginning Fund Balances $ 22,236 $ 22,236 $ 1,319 $ 7,196 $ 7,196 Cancelled Reserves
Unfunded Pensions - - 5,922 5,947 0
Local Econ. Aug. Fund (LEAF) 3,607 - 19,213 19,213 6,789 Total Cancelled Reserves $ 3,607 $ - $ 25,135 $ 25,160 $ 6,789 Revenues 117,369 124,366 121,102 121,102 122,102
Total Financing Sources $ 143,212 $ 146,602 $ 147,556 $ 153,458 $ 136,087 Expenditures (141,893) (139,406) (147,556) (147,581) (136,087) Ending Fund Balances $ 1,319 $ 7,196 $ - $ 5,877 $ 0
Recommendations
1. Receive and file the Fiscal Year 2025-26 Budget
Rebalancing Analysis.
2. Adopt a Resolution approving $16.9 million
($12,494,398 and $4,381,200) of First Quarter budget
amendments to the FY 2025-26 and capital changes.
Questions & Comments
• Questions & Comments
ENDING FUND BALANCE – GENERAL FUND
(in thousands)
FY 2025-26
Beginning
FY 2025-26
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 5,315 $ - $ (5,315) -100.0%
Assigned for Carryovers - - - 0.0%
Economic Stabilization 19,800 19,800 - 0.0%
Post Employment Benefits 6,248 6,248 - 0.0%
Unfunded Pension Benefits 13,147 13,147 - 0.0%
Total $ 44,510 $ 39,195 $ (5,315) -11.9%
Amended Reserve Status
ENDING FUND BALANCE – MEASURE U FUND
(in thousands)
FY 2025-26
Beginning
FY 2025-26
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 1,881 $ - $ (1,881) -100.0%
Assigned for Carryovers - - - 0.0%
Total $ 1,881 $ - $ (1,881) -100.0%
ENDING FUND BALANCE – LEAF
(in thousands)
FY 2025-26
Beginning
FY 2025-26
Ending Variance
Percent
Change
Assigned to:
Unassigned $ 23,076 $ 16,287 $ (6,789) -29.4%
Total $ 23,076 $ 16,287 $ (6,789) -29.4%
Reserve % or $ Target Ending Balance
June 30,2026
Unassigned Fund
Balance *
25% of General Fund
operating appropriations
$27.4M $ 0
Economic
Stabilization *
25% of operating
appropriations
$27.4M $19.8M
Local Economic
Augmentation Fund *
5% of General Fund and
Measure U appropriations
$6.9M $16.3M
OPEB Reserve No Target N/A $ 6.2M
Unfunded Pensions
Reserve
No Target N/A $13.1M
* Discussed in detail on pp. 64-65 of
the FY 2024-26 Adopted Biennial
Budget Book
Note: Should Economic Stabilization
reserve be used, and its level falls below
the minimum amount, the goal is to
replenish within two fiscal years.
General Fund Reserve Policies and Available Reserves