CITY OF SANTA MARIA
Proposed Fiscal Year
2026-28 Biennial Budget
and Public Hearing
JUNE 2, 2026
RECOMMENDATION
Receive a presentation on the Fiscal Year (FY) 2026-28
Biennial Budget, hear public testimony on the preliminary budget proposals, and provide input and direction to staff.
Citywide Proposed Budget
Preparing for the Biennial Budget
• Finance Department and 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
Vacant Position evaluation: review of persistent vacancies and chilled positions Departmental budget re-evaluation: review of all revenues and expenses Financial/Budget Policy Review
Review Capital Outlay Project expenses that may be held Revenue generation opportunity evaluation: look into 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 Established a City Council ad-hoc committee for the rebalancing initiative.
Financial Planning Process – Two Year Financial Plan
February 2026
Council Goal
Setting Session
June 2, 2026
Two-Year
Financial Plan
Deliberation
June 16, 2026
FY 2026-28
Budget Adoption
Goals and Objectives for FY 2026-28
GOAL OBJECTIVE
ADMINISTRATION
Fiscal Management – ensure responsible fiscal and budgeting practices. 1. Balanced budgets.
2. Economic growth.
3. Healthy reserves.
Optimize Service Delivery. 1. Improved service quality.
2. Increased efficiency.
3. Reduced response times.
SAFETY
Public Safety – provide resources to ensure effective law enforcement and fire protection.
1. Community engagement.
2. Provision of appropriate equipment.
3. Promotion of readiness and preparedness.
Code Compliance – ensure safety and quality. 1. Ensure safety and health standards.
2. Engagement and education.
THE BUILT ENVIRONMENT
Well-maintained infrastructure including facilities, streets, parks, and utilities. 1. Continued investment in sound infrastructure.
Recreation and Parks – create inclusive, engaging, and supportive recreation and park spaces for seniors and youth.
1. Promotion of physical activity.
2. Improved mental well-being.
QUALITY OF LIFE
Recreation and Parks – provide for seniors and youth inclusive, engaging, and supportive recreational programs.
1. Diverse recreational programs.
Housing – affordable housing, including single-family homes. 1. Single-family homes accessible to a broader range of income levels.
2. Availability of affordable housing.
3. Community stability.
Homelessness – improved partnerships with local service providers, focused on prevention and tailored solutions to local needs.
1. Increased access to affordable housing.
2. Enhanced support services.
3. Community collaboration.
ECONOMIC DEVELOPMENT
Economic Development – an environment where local businesses can thrive while drawing in new investments.
1. Job creation.
2. Workforce development.
3. Business growth.
4. Investment attraction.
Refer to Proposed Budget Book pp. 6-7
VOTERS
of
Santa Maria
MEASURE U
OVERSIGHT BOARD
BOARD OF
APPEALS
PLANNING
COMMISSION
CDBG
ADVISORY
COMMITTEE
LIBRARY
BOARD
RECREATION &
PARKS
COMMISSION
CITY MANAGER
FINANCE
CITY COUNCIL
CITY ATTORNEY
TRAFFIC
COMMITTEE
CITY CLERK CITY TREASURER
CITY
MANAGER’S
OFFICE
CITY
ATTORNEY’S
OFFICE
POLICE FIRE COMMUNITY
DEVELOPMENT UTILITIES PUBLIC
WORKS
PUBLIC
LIBRARY
RECREATION
& PARKS
CITY OF SANTA MARIA
ORGANIZATIONAL CHART
CITY COUNCIL GOALS
CITY
ATTORNEY’S
OFFICE
CITY
MANAGER’S
OFFICE
COMMUNITY
DEVELOPMENT FINANCE FIRE LIBRARY POLICE
PUBLIC
WORKS
RECREATION
AND PARKS UTILITIES
ADMINISTRATION
Fiscal Management
Optimize Service Delivery
SAFETY
Public Safety
Code Compliance
THE BUILT ENVIRONMENT
Well-maintained
infrastructure including
facilities, streets, parks, and
utilities
Recreation and Parks
QUALITY OF LIFE
Recreation and Parks
Housing
Homelessness
ECONOMIC DEVELOPMENT
Economic Development
Linking City Council Goals & Priorities for 2026-27 with Department Goals and Objectives Refer to Proposed Budget Book p. 8 Citywide Financials
Proposed Operating Budget
Refer to Proposed Budget Book pp. 81 & 85
CITYWIDE BUDGET SUMMARY - OPERATING
PROPOSED FY 2026-28 BIENNIAL BUDGET
FY 2026-27 FY 2027-28
Revenues & Transfers In
Taxes $96,748,160 $98,247,335
Licenses, Permits & Fines 5,615,362 5,615,362
Revenue from Use of Money & Property 3,668,927 3,678,927 Revenues from Other Agencies 11,358,234 11,609,663
Charges for Service 11,813,522 11.873.522
Other Revenue and Transfers 21,443,145 14,243,022
Enterprise Fund Revenues 133,721,322 133,849,144
Total Revenues & Transfers In $284,368,672 $279,116,975 Expenditures & Transfers Out
Public Safety $83,548,707 $85,230,007
Utilities 127,350,165 164,326,758
Public Ways & Facilities 32,237,987 29,791,685
Leisure & Cultural Services 20,590,295 20,840,668
Community & Economic Development 8,900,951 9,029,972
General Government 31,003,905 31,274,738
Total Expenditures & Transfers Out $303,632,010 $340,463,828 Net Operating Budget $(19,263,338) $(61,346,853)
Enterprise Fund
Revenues
47.6%
Taxes
34.5%
Other Revenue
and Transfers
7.6%
Charges for
Service
4.2%
Revenues
from Other
Agencies
4.0%
Licenses, Permits
& Fines
2.0%
FY 2026-27 Sources
Utilities
43.2%
Public
Safety
28.3%
Public Ways
& Facilities
10.9%
General
Government
10.5%
Leisure &
Cultural
Services
7.0%
FY 2026-27 Uses
Proposed Budget Citywide Uses
Refer to Proposed Budget Book pp. 105-108
CITYWIDE BUDGET SUMMARY - OPERATING
PROPOSED FY 2026-28 BIENNIAL BUDGET
FY 2026-27 FY 2027-28
Expenditures & Transfers Out
Salaries & Benefits $134,492,270 $137,381,318
Services & Supplies 169,699,565 194,031,613
Capital & Outside Agencies 36,469,601 74,606,035
Debt Service 3,890,262 15,676,643
Transfers 22,874,766 3,625,350
Total Expenditures & Transfers Out $367,426,464 $425,320,959 Services &
Supplies
46.2%
Salaries &
Benefits
36.6%
Capital & Outside
Agencies
9.9%
Transfers
6.2%
Debt Service
1.1%
FY 2026-27 Uses
Services &
Supplies
45.6%
Salaries &
Benefits
32.3%
Capital &
Outside
Agencies
17.5%
Debt
Service
3.7%
Transfers
0.9%
FY 2027-28 Uses
Police
28.1%
Utility
19.2%
Recreation &
Parks
12.9%
Fire
12.3%
Public Works
9.9%
City
Manager
4.9%
Community
Development
4.4%
Finance
3.6%
Library
3.4%
City
Attorney
1.3%
CITYWIDE BUDGET SUMMARY - PERSONNEL
PROPOSED FY 2026-27 BUDGET
FY 2025-26 FY 2026-27 Change
Department
City Attorney’s Office 10.00 9.00 (1.00)
City Manager’s Office 43.80 34.80 (9.00)
Finance 31.80 25.00 (6.80)
Community Development 33.00 31.00 (2.00)
Library 27.40 23.60 (3.80)
Recreation & Parks 100.00 90.60 (9.40)
Fire 86.80 86.80 -
Police 200.00 198.00 (2.00)
Public Works 74.80 70.00 (4.80)
Utilities 134.00 135.00 1.00
Total Budgeted FTE 741.60 703.80 (37.80)
Proposed Personnel
Refer to Proposed Budget Book pp. 161-163
General Fund and Measure U
Proposed General Fund Budget
Refer to Proposed Budget Book pp. 62-65, 80 & 82
Taxes
65.1%
Other Revenue and
Transfers
16.1%
Charges for
Service
10.2%
Licenses,
Permits & Fines
4.9%
Rev. from Use
of Money &
Property
3.1%
Revenues from
Other Agencies
0.6%
FY 2026-27 Sources
Salaries &
Benefits
69.0%
Services &
Supplies
25.7%
Transfers
Out
4.3%
Capital &
Outside
Agencies
0.8%
Debt
Service
0.2%
FY 2026-27 Uses
CITYWIDE BUDGET SUMMARY – GENERAL FUND
PROPOSED FY 2026-28 BIENNIAL BUDGET
FY 2026-27 FY 2027-28
Revenues & Transfers In
Taxes $70,110,840 $71,077,269
Licenses, Permits & Fines 5,245,362 5,245,362
Revenue from Use of Money & Property 3,380,615 3,390,615 Revenues from Other Agencies 603,013 603,013
Charges for Service 10,944,356 11,004,356
Other Revenue and Transfers 10,056,591 10,054,591
Total Revenues & Transfers In $100,340,777 $101,375,206 Expenditures & Transfers Out
Salaries & Benefits $74,225,304 $75,731,007
Services & Supplies 27,633,109 27,926,353
Capital & Outside Agencies 849,794 849,794
Debt Service 266,912 -
Transfers Out 4,641,696 4,719,611
Total Expenditures & Transfers Out $107,616,815 $109,226,765 Surplus/(Gap) $(7,276,038) $(7,851,559)
Transfer from LEAF 7,276,038 -
Net Operating Budget $- $(7,851,559)
Police
40.8%
Fire
14.0%
Finance
11.1%
Recreation
& Parks
10.6%
City
Manager’s
Office
10.0%Community
Development
7.0%
Public Works
5.0%
City Attorney’s
Office
1.2%
Mayor & Council
0.3%
FY 2026-27
Proposed General Fund Budget
Refer to Proposed Budget Book pp. 62-65, 80 & 82
CITYWIDE BUDGET SUMMARY – GENERAL FUND
PROPOSED FY 2026-28 BIENNIAL BUDGET
FY 2026-27 FY 2027-28
Department
Mayor & Council $326,664 $326,407
City Attorney’s Office 1,328,069 1,332,350
City Manager’s Office 10,726,733 10,789,993
Finance 11,994,728 12,141,474
Community Development 7,506,049 7,609,107
Recreation & Parks 11,427,290 11,545,473
Fire 15,102,589 15,190,668
Police 43,862,824 44,901,132
Public Works 5,341,869 5,390,161
Total Expenditures & Transfers Out $107,616,815 $109,226,765 Police
41.1%
Fire
13.9%
Finance
11.1%
Recreation
& Parks
10.6%
City
Manager’s
Office
9.9%
Community
Development
7.0%
Public Works
4.9%
City Attorney’s
Office
1.2%
Mayor & Council
0.3%
FY 2027-28
General Fund Tax Revenue Performance
Esti ate
gete
gete
M ONS
Ana ysis o ro erty Ta Re en e
ro erty Ta ro erty Ta n ie o Co ine ro erty Ta Refer to Proposed Budget Book p. 63
General Fund Tax Revenue Performance
Esti ate
gete
gete
M ONS
Ana ysis o Sa es Ta Re en e
Sa es Ta Sa es Ta n ie
Refer to Proposed Budget Book p. 62
General Fund Tax Revenue Performance
Esti ate
gete
gete
M ONS
Ana ysis o Transient O an y Ta
Transient O an y Ta
Refer to Proposed Budget Book p. 63
General Fund Balancing Measures
• Citywide reduction of contract/consulting services, training, subscriptions & other operational costs: $1,451,000
• Increased projections for less predictable revenues and newly proposed fees:
$1,727,000
• Closure of Paul Nelson Aquatic Center for 6 months (Dec-May), including unfunding of assigned Limited Service positions: $344,000 • Deletion of vacant positions and/or reallocate filled positions to other Funds, where justifiable (8.30 FTEs): $1,167,000
• Unfund Limited Service positions in Library, Recreation & Parks, Police and Public Works (impacts programs and operating hours): $446,000
• Eliminate subsidies to United Way, Historical Museum, and Museum of Flight:
$70,000
• Assumes that most Governmental Fees are set to full recovery level, estimating the potential revenue growth of $2.012 million, of which $1.742 million impacts the General Fund
• Includes balancing the General Fund in FY 2026-27 with a transfer in from the LEAF reserve’s one-time savings of $7.3 million
Supplemental Budget Requests (SBRs)
• 78 SBRs submitted, of which 63 recommended
– Revenue Backed SBRs
• Limited-service staff for the Community Development and Police Departments – Contractual obligations
• Animal Services Contract and software maintenance agreements • General Liability and Workers’ Compensation insurance premiums and claims increases
– Others
• Replacement of the City’s business equipment, e.g., laptops, computers, etc. • Enterprise Resource Planning (ERP) Budget/Grants/Capital Planning Module • 1.0 FTE Finance Clerk I for Utility Billing
• Police Department Software
– Increased Cost to General Fund:
• FY 2026-27 - $1.3 Million
• FY 2027-28 - $1.6 Million
A A A A A E
ANN A S R GA
C M AT E GA
AR ANCE ASE
RE EN ES
SES
GENERA N ORECAST N S
General Fund Forecast
Refer to Proposed Budget Book pp. 62-66
A A A A A A E Sa aries ene its
S ies Ser i es
Ca ita O tsi e Agen ies
e t Ser i e
Trans ers
Tota E en it res
Tota Re en es
Genera n Re en es an E en it res
M ONS
General Fund Forecast
Refer to Proposed Budget Book pp. 62-66
2020-21
$5.44M
2021-22
$6.26M
2022-23
$7.24M
2023-24
$7.25M
2024-25
$8.38M
2025-26
$8.95M
2026-27
$10.18M
$0
Historical Costs: PERS UAL for Miscellaneous Plan
($ in millions)
2020-21
$1.22M
2021-22
$1.45M
2022-23
$1.67M
2023-24
$1.61M
2024-25
$1.97M
2025-26
$2.29M
2026-27
$2.62M
$0
Historical Costs: PERS UAL for Fire Plan
($ in millions)
2020-21
$2.76M
2021-22
$3.24M
2022-23
$3.69M
2023-24
$3.62M
2024-25
$4.32M
2025-26
$4.95M
2026-27
$5.64M
$0
Historical Costs: PERS UAL for Police Plan
($ in millions)
Historical Costs: CalPERS UAL
Refer to Proposed Budget Book p. 16
Historical Costs: Insurance Premiums
2020-21
$3.67M
2021-22
$3.77M
2022-23
$4.59M
2023-24
$5.50M
2024-25
$7.04M
2025-26
$9.03M
2026-27
$8.87M
$0
Historical Costs: Health Insurance Premium
($ in millions)
2020-21
$3.44M
2021-22
$3.40M
2022-23
$6.16M
2023-24
$5.79M
2024-25
$5.90M
2025-26
$8.24M 2026-27
$6.94M
$0
Historical Costs: Workers' Compensation Insurance Premium 2020-21
$1.70M
2021-22
$1.93M
2022-23
$3.78M
2023-24
$3.88M
2024-25
$4.20M
2025-26
$6.35M
2026-27
$6.34M
$0
Historical Costs: General Liability Insurance Premium
($ in millions)
Refer to Proposed Budget Book p. 17
Proposed Measure U Fund Budget
Refer to Proposed Budget Book pp. 67-68, 99, 107& 180-183 Taxes
99.4%
Rev. from Use of
Money & Property
0.6%
FY 2026-27 Sources
Salaries &
Benefits
86.9%
Services &
Supplies
13.1%
Transfers
Out
0.0%
FY 2026-27 Uses
CITYWIDE BUDGET SUMMARY – MEASURE U FUND
PROPOSED FY 2026-28 BIENNIAL BUDGET
FY 2026-27 FY 2027-28
Revenues & Transfers In
Taxes $26,637,320 $27,170,066
Revenue from Use of Money & Property 171,354 171,354
Total Revenues & Transfers In $26,808,674 $27,341,420
Expenditures & Transfers Out
Salaries & Benefits $24,568,898 $25,211,138
Services & Supplies 3,701,145 3,701,145
Transfers Out 9,947 9,947
Total Expenditures & Transfers Out $28,279,990 $28,922,230 Net Operating Budget $(1,471,316) $(1,580,810)
MEASURE U BY CATEGORY
PROPOSED FY 2026-27 BUDGET
Category
Public
Safety
Youth
Services
Quality
of Life
Department
Police $11,978,954 $- $-
Fire 12,264,090 - -
Recreation & Parks 1,507,877 581,886 71,942
Library 61,864 559,675 31,650
Community Development - - 995,912
City Manager 20,211 - 203,260
Finance 2,669 - -
Total Expenditures & Transfers Out $25,835,665 $1,141,561 $1,302,764 91% 4% 5%
Public Safety
91.4%
Quality of Life
4.6%
Youth Services
4.0%
FY 2026-27
Proposed Measure U Fund Budget
Refer to Proposed Budget Book pp. 67-68
Enterprise Funds
ENTERPRISE FUNDS BUDGET SUMMARY - OPERATING
PROPOSED FY 2026-28 BIENNIAL BUDGET
Revenue Expense
Provision / (Use)
of Fund Balance
FY 2026-27
Water Resources $72,815,585 $84,947,013 $(12,131,428)
Solid Waste $40,025,372 $42,403,152 $(2,377,780)
Transit $19,195,926 $21,049,277 $(1,853,351)
Radio $1,684,439 $885,567 $798,872
FY 2027-28
Water Resources $72,869,729 121,415,541 $(48,545,812)
Solid Waste $40,099,050 42,911,217 $(2,812,167)
Transit $19,195,926 18,936,184 $259,742
Radio $1,684,439 886,055 $798,384
Refer to Proposed Budget Book pp. 69-76, 112-113 & 142-146 Capital Improvement Plan,
Maintenance, and Equipment
Projects
FUNDING SOURCES AND USES
Proposed
FY 2026-27
Proposed
FY 2027-28
Funding Sources
Capital Projects – General Fund $1,465,294 $ 849,794
Gas Tax & Transportation Development Act Fund 5.897.407 6,165,748 Growth Mitigation Fund 4,250,000 18,857,000
Residential Development Tax Fund 90,000 90,000
Measure A Fund 3,516,483 3,094,510
Public Transit Fund 8,255,000 5,500,000
Water Fund 7,758,000 24,547,000
Wastewater Fund 12,775,220 35,742,430
Developer / Grant Street Projects Fund 3,001,029 10,693,281 Fleet Services Fund 976,121 922,517
Solid Waste Disposal Fund 995,000 900,000
Quimby-Park Acquisition & Development Fund 675,000 675,000 Landscape District Fund 300,000 300,000
Total Funding Sources $49,954,554 $108,337,280
FUNDING USES
Proposed
FY 2026-27
Proposed
FY 2027-28
Category
Public Safety $ 408,621 $ 922,517
Public Utilities 23,023,220 64,456,430
Public Ways & Facilities 16,880,478 36,393,333
Public Transit 8,327,500 5,500,000
Leisure & Cultural Services 1,065,000 1,065,000
General Government 249,735 -
Total Funding Uses $49,954,554 $108,337,280
Refer to Proposed Budget Book pp. 139-153
History of Reserves
A A A A A A E o a E on A g entation n
Meas re n
nrestri te n a an e
n n e ensions Reser e
O E Reser e
E ono i Sta i ation Reser e
M ONS
istory o Reser es
Genera
n
Reser es
What Lies Ahead…
• Finance Department and all City Departments will continue to work together to address the structural deficit, entailing:
– Keeping the hiring chill in place
– Continue to evaluate financial and budget policies and financial forecasts – Review Capital Outlay Project expenses and work on a funding plan for maintenance and projects
– Continue to review revenue generation opportunities
– Continue working on short- and long-term rebalancing initiatives that resolve the structural deficit and assist with strategic planning for the future – Evaluate the Measure U Fund so that expenses align with policy and funding
RECOMMENDATION
Hear public testimony on the preliminary budget proposals, and provide input and direction to staff.
Paul Nelson Aquatic Center
City is subsidizing 75% of the cost:
– FY 2024-25 – Expenditures $1,300,000
– FY 2024-25 – Revenues $300,000
– Net General Fund Cost: $1,000,000
• Usage during winter months – 1,000
• Usage during spring summer months – 2,000 to over 10,000 Current Fee Category Current Fee
• 5 years and under / 65 years and up
• 6–16 years $1.50
• 17–54 years $3.00
• 55–64 years $1.50