Agenda — Willits City Council, June 29, 2026

111 E. Commercial Street
Willits, California 95490
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WILLITS CITY COUNCIL
AGENDA

SPECIAL MEETING
JUNE 29, 2026 | 6:30 PM

1. OPENING MATTERS
a. Call to Order. | b. Pledge to Flag. | c. Roll Call.

2. PUBLIC COMMUNICATIONS
Council welcomes participation in its meetings. Comments shall be limited to three (3) minutes per person so that everyone may be given an opportunity to be heard. To expedite matters and avoid repetition, whenever any group of persons wishes to address the Council on the same subject matter, the Mayor may request that a spokesperson be chosen by the group. This item is limited to matters under the jurisdiction of the City Council which are not on the posted agenda. Public criticism of the City Council, Commission, Boards, and Agencies will not be prohibited. No action shall be taken.

3. ACTION ITEM
Receive a Report on the City’s Vacancies in a Public Hearing in Compliance with California Government Code Section 3502.3.

4. Discussion and Possible Adoption of the Proposed Fiscal Year 2026-27 Budget.

5. ADJOURNMENT
Right to Appeal - Persons who are dissatisfied with the decisions of the City Council may have the right to a review of that decision by a court. The City has adopted Section 1094.6 of the Code of Civil Procedure, which generally limits to 90 days the time within which the decisions of the City boards and agencies may be judicially challenged.

I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the bulletin board at the main entrance of the City of Willits City Hall, located at 111 East Commercial Street, Willits, California, not less than 72-hours prior to the meeting set forth on this agenda.

Dated this 25th day of June, 2026.

Delores Pedersen, City Clerk
Americans with Disabilities Act (ADA) Compliance
If you need assistance to attend or participate in a City Council meeting, please contact the City Clerk’s office at 707.459.7113 or Fax .707.459.1562. Notification at least 48-hours prior to the meeting will assist the City Clerk in assuring that reasonable accommodations are made to provide accessibility to the meeting. Our meeting room is wheelchair accessible, and ADA parking is available.

Additional Meeting Information for Interested Parties
Materials related to an item on this Agenda submitted to the Willits City Council, Planning Commission, or Community Development Agency after distribution of the agenda packet are available for public inspection at the City Clerk’s office at 111 E. Commercial Street, Willits, during normal business hours, Monday through Thursday, 9 AM to 5:30 PM.

Item No. 3
Meeting Date: June 29, 2026

AGENDA SUMMARY REPORT
To: Honorable Mayor and Council Members
From: Joseph Park, Administrative Services Manager
Agenda Title: RECEIVE A REPORT ON THE CITY’S VACANCIES IN A PUBLIC HEARING IN COMPLIANCE WITH CALIFORNIA GOVERNMENT CODE SECTION 3502.3.

Type: Presentation Consent Regular Agenda Public Hearing Urgent Time: 15 minutes.

Summary of Request:

The Council is asked to open a public hearing to receive a report on the status of the City vacancies, hear from labor organizations who elect to participate, and accept public comments prior to acting on the new fiscal year budget. This complies with Government Code Section 3502.3.

California State Assembly Bill (AB) 2561 was approved on September 22, 2024, and added §3502.3 to California’s Government Code. This law, effective January 1, 2025, requires public agencies at least once each fiscal year to: (1) hold a public hearing and receive the agency’s report on the status of vacancies and recruitment and retention efforts; (2) during the hearing, identify any necessary changes to policies, procedures, and recruitment activities that may lead to hiring obstacles; and, (3) allow the recognized employee organization for bargaining units to make a presentation at the hearing. In addition, if the number of job vacancies within a single bargaining unit meets or exceeds 20% of the total number of authorized full-time positions, the City must, upon request of the recognized employee organization, include additional specified information during the public hearing. AB 2561 requires public agencies to report annually, at a public hearing, on staffing vacancies and recruitment and retention efforts, and to provide employee organizations an opportunity to present.

Recommended Action: Receive a report on the City’s vacancies in a public hearing in Compliance with California Government Code Section 3502.3
Alternative(s): None recommended.

Fiscal Impact: There is no fiscal impact.

Personnel Impact: None.

Identified City Council Conflict of Interest: None.

California Environmental Quality Act: Does not apply.

This Item Relates to the following General Plan Element : N/A Land Use Circulation Conservation and Open Space Noise Housing Public Services and Facilities, Parks and Recreation Economic Development
Reviewed by: Interim City Manager City Attorney City Clerk Administrative Services Manager Council Action: Approved Denied Other: ________________________________________ Records: Agreement Resolution #_________ Ordinance #_________ Other _________

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CITY OF WILLITS CITY COUNCIL
AGENDA ITEM REPORT FOR MEETING OF: June 29, 2026
To: Honorable Mayor and Members of the City Council
From: Joseph Park, Administrative Services Manager
Michelle Coleman, Administrative Services Technician, HR Liaison Agenda Title: Receive a Report on the City’s Vacancies in a Public Hearing in Compliance with California Government Code Section 3502.3.

ACTION REQUESTED:

This item is to request that the City Council receive a report on the City’s vacancies in a public hearing in Compliance with California Government Code Section 3502.3.

EXECUTIVE SUMMARY:

BACKGROUND:

DISCUSSION:

The City has two vacancies as of June 19, 2026. One (1) in the unrepresented employee group: City Manager, and one (1) in the Willits Police Officer Association: Police Sergeant. There is one additional

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vacancy anticipated in July for the International Brotherhood of Electrical Workers, based on a notice to separate that has been received. The vacancy rate is less than 20% for each of the recognized bargaining units and for the City as a whole. The breakdown is shown in the table below. Represented positions are based on the budgeted positions approved with the March 9, 2026, Reorganization.

Labor Unit Vacancies Positions
Represented
Vacancy
Rate
International Brotherhood of Electrical Workers (IBEW) 1 16 6.25% Willits Police Officer’s Association 1 14 7.14%
Non-Represented Positions within the City 1 15 6.67%
Elected Positions within the City 0 5 0.00%
Total Positions 3 50 6.00%
The City has made no changes to policies, procedures, and recruitment activities that may lead to obstacles in the hiring process and is actively recruiting for the positions.

The labor representation units have been offered an opportunity to provide a presentation as part of this hearing.

Because the City has a lower than 20% vacancy rate overall and in each of its representation units, there is no further information required to be shared.

FISCAL IMPACT:

There is no fiscal impact.

OPTIONS:

There is no other means to comply with the law.

ATTACHMENTS:

None.

Item No. 4
Meeting Date: June 29, 2026

AGENDA SUMMARY REPORT
To: Honorable Mayor and Council Members
From: Joseph Park, Administrative Services Manager
Agenda Title: DISCUSSION AND POSSIBLE ADOPTION OF THE PROPOSED FISCAL YEAR 2026-27 BUDGET.

Type: Presentation Consent Regular Agenda Public Hearing Urgent Summary of Request:

On March 9, 2026, the City Council declared a Fiscal Emergency based on significant funding imbalances and deficits – particularly in the City’s General Fund. Declaration of the Fiscal Emergency effectively put into motion several strategies aimed at reducing current and future deficit spending, while mitigating the exposure of expenditure cuts on City services and programs. Over the last three months, staffing reorganizations and alternative approaches to the City’s budgetary framework have been implemented. Although the City continues to be in a deficit position, considerable progress has been made to close the funding gap. The budget presented herein has been prepared without any significant one-time or extraneous budget alternatives, with the goal of working towards little to no impacts on programs and services delivered to the community.

As a means to provide the City of Willits with a spending plan for Fiscal Year 2026-27, staff have worked over the last three months to prepare the attached budget document consistent with the goal of achieving long-term sustainability for all citywide funds. A synopsis of the major funds and fund groups in the FY 2026-27 Proposed Budget is provided below.

Citywide Budget
Total appropriations recommended in the Citywide Fiscal Year 2026-27 Proposed Budget are $16,821,004. Of this amount, the General Fund – the City’s largest fund, has appropriations totaling $6,436,329, or 38% of the total budget. The City’s Enterprise Funds, made up of Water, Wastewater, Airport, and Closed Landfill, have total appropriations of $7,499,307 (45%) combined; while the City’s Measure K Fund has total appropriations of $1,228,160 (7%). These six funds represent the City’s largest funds in terms of spending authority and comprise approximately 90% of the Citywide budget.

Recommended Action: Adopt a resolution approving and adopting the annual operating budget for the city of Willits for fiscal year 2026-2027.

Alternative(s): Do not adopt the annual operating budget for Fiscal Year 2026-27 and provide direction to staff.

Adopt a resolution authorizing continuation of Municipal Operations based upon the FY 2025-2026 Budget for an additional thirty (30) days.

Fiscal Impact: As set forth in the Budget document.

Personnel Impact: None.

Identified City Council Conflict of Interest: None.

This Item Relates to the following General Plan Element : N/A Land Use Circulation Conservation and Open Space Noise Housing Public Services and Facilities, Parks and Recreation Economic Development
Reviewed by: Interim City Manager City Attorney City Clerk Administrative Services Manager
Council Action: Approved Denied Other: ________________________________________ Records: Agreement Resolution #_________ Ordinance #_________ Other _________

CITY OF WILLITS
FISCAL YEAR 2026-27 BUDGET OVERVIEW
Following is a summary of the Fiscal Year 2026-27 Operating Budget. On March 9, 2026, the City Council declared a Fiscal Emergency based on significant funding imbalances and deficits – particularly in the City’s General Fund. Declaration of the Fiscal Emergency effectively put into motion several strategies aimed at reducing current and future deficit spending, while mitigating the exposure of expenditure cuts on City services and programs. Over the last three months, staffing reorganizations and alternative approaches to the City’s budgetary framework have been implemented. Although the City continues to be in a deficit position, considerable progress has been made to close the funding gap. The budget presented herein has been prepared without any significant one-time or extraneous budget alternatives, with the goal of working towards little to no impacts on programs and services delivered to the community.

As a means to provide the City of Willits with a spending plan for Fiscal Year 2026-27, staff has worked over the last three months to prepare the attached budget document consistent with the goal of achieving long-term sustainability for all citywide funds. A synopsis of the major funds and fund groups in the FY 2026-27 Proposed Budget is provided below.

Citywide Budget
Total appropriations recommended in the Citywide Fiscal Year 2026-27 Proposed Budget are $16,821,004. Of this amount, the General Fund – the City’s largest fund, has appropriations totaling $6,436,329, or 38% of the total budget. The City’s Enterprise Funds, made up of Water, Wastewater, Airport and Closed Landfill, have total appropriations of $7,499,307 (45%) combined; while the City’s Measure K Fund has total appropriations of $1,228,160 (7%). These six funds represent the City’s largest funds in terms of spending authority and comprise approximately 90% of the Citywide budget.

BEGINNING EXPENDITURES ENDING

FUND (TYPE) FUND BALANCE REVENUES (APPROPRIATIONS) FUND BALANCE General Fund $ 399,269 $ 5,785,310 $ 6,436,329 $ (251,750) Info. Technology Fund (137,416) 229,099 209,300 (117,617) Measure K Fund 3,330,031 1,228,160 1,228,160 3,330,031
Enterprise Funds $ 1,348,645 $ 9,719,887 $ 7,499,307 $ 3,569,225 SR Funds - Transportation 74,788 1,100,093 642,908 531,973 SR Funds - Capital Impvmt 241,309 805,000 805,000 241,309 SR Funds - Police-Related 198,785 400 - 199,185
SR Funds - Other 405,613 - - 405,613
Successor Agency Fund 354,627 - - 354,627
Total Citywide Budget: $ 6,215,651 $ 18,867,949 $ 16,821,004 $ 8,262,596 FY 2026-27 PROPOSED BUDGET
The FY 2026-27 budget development process has not only been challenging due to the implementation of fiscal emergency strategies - ever-increasing prices for core operational expenses (staff benefits / insurance / CalPERS unfunded liability) have added to the complexity.

Given these challenges, the FY 2026-27 Proposed Budget essentially only enables a basic continuation of existing service levels. Given the continued volatility of existing and future expenditure elements and the economic forces directly impacting revenues, staff will periodically present updates to this budget after its final adoption in June 2026 as the fiscal year unfolds.

Citywide Capital Budget
Total FY 2026-27 proposed appropriations of $16,821,004 include $1,834,190 in capital expenditures. Capital expenditures are expected to be incurred for a variety of Citywide services including Water enterprise operations, transportation, and parks infrastructure. The table below shows those funds which include capital projects:

Water- SWRP Filter Media Replacement $ 100,000
Water - Centennial Spillway Gates $ 100,000
Water - Ground Water Tank $ 450,000
Transportation - East Valley Bridge Replacement $ 120,000 Transportation - West Mendocino Phase II Design $ 120,000 RMRA SB-1 - Striping Projects $ 139,190
CA Clean Grant (CIP) - Bud Snyder Park Restroom Remodel $ 200,000 CA Clean Grant (CIP) - Park Pavillion $ 350,000
CA Clean Grant (CIP) - Playground Equipment $ 50,000
CA Clean Grant (CIP) - Rec Grove Sidewalks & Trails $ 25,000 CA Clean Grant (CIP) - Solar Pedestrian Lighting $ 180,000

CAPITAL PROJECTS - FUND TOTALS
TOTAL CAPITAL PROJECTS: $ 1,834,190
General Fund Budget
FY 2026-27 General Fund Proposed Budget:

Revenues Expenditures
FY 2025-26 Estimated $ 6,826,547 $ 6,789,807
FY 2026-27 Proposed Budget $ 5,785,310 $ 6,436,329
The FY 2026-27 General Fund Proposed Budget reflects revenues of $5,785,310 and expenditures of $6,436,329. The General Fund Proposed Budget is expected to require $651,019 from reserves (fund balance) to balance the budget. Specific revenue and expenditure impacts to the City’s General Fund for FY 2026-27 are noted below.

FY 2026-27 budgeted revenue of $5,785,310 reflects an approximate $1.0 million decrease from revenues anticipated to be collected in FY 2025-26, primarily due to:
- Anticipated 2.0% increase in Property Taxes consistent with current housing market activity and increase in State CPI (note: secured property taxes now include former collections of Redevelopment Property Tax Trust Fund (RPTTF) receipts due to payoff of all former redevelopment obligations);
- Anticipated collections of Sales Tax consistent with staff and consultant expectations given the current state of the local economy;
- Static collections of Transient Occupancy Taxes as room rates are projected to rise due to inflation and consistent with current activity;
- Conservative projections for development- and recreation-related fees and charges; offset by
- A $1.2 million transfer in from the Measure K Fund (FY 2026-27 expected collections from sales tax) to help offset budgeted deficits in the General Fund (note: $2.0 million was transferred from Measure K to the General Fund in FY 2025-26); and - Removal of all one-time grant activity from FY 2025-26.

FY 2026-27 budgeted expenditures of $6,436,329 reflects an approximate $353,000 decrease from expenditures anticipated to be incurred in FY 2025-26, primarily due to:
- Implementation of a staffing reorganization plan consistent with declaration of a fiscal emergency on March 9, 2026 (note: this resulted in ongoing General Fund cost reductions of approximately $700,000);
- An increase of $35,000 for the General Fund portion of the CalPERS Unfunded Liability amortization cost;
- A $235,000 increase in medical benefits costs due to higher premiums; - An increase of approximately $51,000 for the General Fund’s portion of Liability and Property insurance costs);
- An increase of $73,000 in Information Technology costs due to budgeting these costs appropriation in affected funds;
- An increase of $25,000 in Audit & Accounting Services to account for additional audit costs (City will try to catch up with audits in FY 2026-27) and financial consulting; - Addition of an $87,000 transfer out from the General Fund to the Closed Landfill Fund for 50% of the expected costs associated with Closed Landfill maintenance (note: these costs should be shared with the County – the City’s portion is required to be paid from the General Fund);
- A $200,000 decrease in aggregate Police Department and Dispatch overtime (note: FY 2026-27 total budget for overtime and shift differential = $375,000) - Other increases / decreases to department base budgets based on prior year activity and expectations.

Based on the information noted above, the recommended Final General Fund Budget is expected to need $651,019 in reserves (fund balance) to balance the budget. Total General Fund reserves are anticipated to be approximately (-$251,750) at the end of FY 2026-27. Projected reserve levels as of June 30, 2027 are expected to include:
- $ (251,750) Undesignated Reserves
- $ (251,750) Total General Fund Reserves
General Fund Multi-Year Forecast
As a means to gauge the future ability to provide a consistent level of citywide services and programs, a Multi-Year Forecast continues to be developed for the City’s General Fund – the fund where a vast majority of non-enterprise services are accounted for.

The General Fund forecast has been developed to create a forward-looking, conservative baseline budgetary outlook for the City’s General Fund and related fund balance under a given set of revenue and expenditure growth assumptions. The forecast has been built as a “base-case” model in which future years only focus on ongoing revenues and expenditures; and known onetime fiscal activity (eliminates all other one-time revenues and expenditures).

The General Fund forecast is meant to serve as only one tool to measure fiscal sustainability into the future. The model below incorporates known cost drivers, including any negotiated salary increases (of which there are currently none), CalPERS retirement cost increases, cost allocations, and a conservative increase in most other operating expenditures. The model also assumes conservative growth in discretionary revenue sources, including property tax, sales tax, transient occupancy tax and other fees and charges. The model is developed to demonstrate the ability to sustain the existing levels of service provided citywide.

The forecast noted above assumes that all Measure K sales tax expected each fiscal year is transferred to the General Fund as a discretionary revenue source (approximately $1.25 million annually). As indicated in the model above, the General Fund will require $651,023 in reserves to balance the budget for FY 2026-27. There are also similar deficits projected for the following three fiscal years until the scheduled expiration of Measure K in November 2030. Subsequent to this date, deficits increase significantly.

Although the City has reduced previously forecasted annual deficits of $1.2 million and more, further works remains to assure the General Fund gets back on a fiscally sustainable path. To that end, opportunties to augment and / or maintain revenue streams; and reduce expenditures should be sought out. At the present time, there are no negotiated labor increases that have been included for the FY 2026-27 and beyond. An overview of the General Fund Multi-Year Forecast will be provided during the June 29, 2026 City Council Meeting when the budget is discussed.

As shown in the graph below, total expenditures for CalPERS-related costs are anticipated to remain fairly stable over he course of the forecast, with only a $36,000 increase anticipated by FY 2031-32.

Forecast – General Fund Balance impacts:

As noted above, fund balance in the General Fund is expected to be negative ($251,755) by the end of FY 2026-27 and decrease more with each successive year. The General Fund will be reliant on fund balance in the Measure K Fund to fund operations until additional budget sustainability strategies are implemented. At the end of FY 2026-27, Measure K is expected to have $3.3 million in fund balance, which will be used to offset negative fund balances in the General Fund. Under the current fiscal framework, the $3.3 million in Measure K Fund balance will be exhausted by FY 2030-31 if no further budget balancing actions are taken.

Measure K Fund
FY 2026-27 Measure K Fund Proposed Budget:

Revenues Expenditures
FY 2025-26 Estimated $ 1,216,000 $ 2,110,000
FY 2026-27 Proposed Budget $ 1,228,160 $ 1,228,160
The Measure K Fund accounts for a 10-year ¾-cent transaction and use tax (general purpose tax) approved by the electorate in November 2020 that is used to support law enforcement staffing and operations, streets and sports field maintenance, maintenance of City facilities, and general City services.

FY 2026-27 Measure K Fund revenues are projected to be slightly higher than those anticipated for FY 2025-26, primarily due to growth in sales tax.

FY 2026-27 Measure K Fund expenditures are recommended to be the same amount as those collected, accounting for a straight transfer of all revenues collected to the General Fund. It should be mentioned that during FY 2025-26, Measure K transferred $2 million to the General Fund to help offset significant deficits.

It is anticipated that the Measure K Fund will have $3,330,031 remaining in Fund Balance at the end of FY 2026-27.

Similar to the General Fund, a long-term forecast continues to be updated for the Measure K Fund as a gauge for fiscal sustainability. The Measure K forecast includes the following assumptions:
• Transactions and use Tax revenues expected to generate approximately $1.25 million annually (expected to grow slightly each year)
• Annual ongoing transfers of sales taxes collected to the General Fund As shown in the long-term forecast for Measure K Fund Balance below, it is anticipated that approximately $3.3 million in total reserves will be exhausted by FY 2031-32 to cover projected General Fund deficits.

Water Fund(s)
FY 2026-27 Water Fund Proposed Budget:

Revenues Expenditures
FY 2025-26 Estimated $ 3,840,992 $ 3,515,303
FY 2026-27 Proposed Budget $ 3,296,000 $ 3,658,563
FY 2026-27 Water Fund revenues are currently projected to be approximately $545,000 lower than amounts anticipated to be collected during FY 2025-26, primarily due to the elimination of a one-time transfer in from the Sewer Fund expected in FY 2025-26. It should be mentioned that FY 2026-27 revenues do not include the expected rate increases for the coming fiscal year.

FY 2026-27 Water Fund expenditures are recommended to be approximately $140,000 higher than those estimated for FY 2025-26 primarily due to higher capital project appropriations offset by a reduction in transfers out related to Water Capital Improvement activities.

Significant capital projects and outlay include the following:
- SWTP Filter Media Replacement - $ 100,000
- Centennial Spillway Gates - $ 100,000
- Groundwater Tank $ 450,000
The Water Fund has a total of $650,000 in capital projects / outlay budgeted for FY 2026-27.

It is anticipated that the Water Fund(s) will have $2,590,257 in Fund Balance / Working Capital at the end of FY 2026-27. Amounts expected to be available on June 30, 2027 are noted below:
- $ 2,602,248 Undesignated Reserves / Working Capital (Fund 530) - (11,991) Capital Improvement Reserve (Fund 430)

$ 2,590,257 Total Water Fund(s) Reserves / Working Capital Sewer Fund(s)
FY 2026-27 Sewer Fund Proposed Budget:

Revenues Expenditures
FY 2025-26 Estimated $ 7,708,214 $ 11,203,784
FY 2026-27 Proposed Budget $ 6,122,456 $ 3,603,524
FY 2026-27 Sewer Fund revenues are currently projected to be approximately $1.6 million lower than amounts anticipated to be collected during FY 2025-26, primarily due to the removal of a $3.7 million transfer in from the Sewer Capital Fund in FY 2025-26 offset by an expected 2.1 million grant receipt expected in FY 2026-27 (both for Syserco Project). Similar to the Water Fund, it should be mentioned that FY 2026-27 revenues do not include the expected rate increases for the coming fiscal year.

Sewer Fund expenditures are recommended to be approximately $7.6 million lower than those estimated for FY 2025-26 primarily due to the undertaking the vast majority of the Syserco Project in FY 2025-26 (expenses and inter-fund transfers expected to be lower). There are no capital projects budgeted in the Sewer Fund for FY 2026-27 (note: any unfinished capital Sewer capital projects budgeted in FY 2025-26 will likely be carried over to FY 2026-27).

It is anticipated that the Sewer Fund(s) will have $2,413,525 in Fund Balance / Working Capital at the end of FY 2026-27. Amounts expected to be available on June 30, 2027 are noted below:
- $ 2,413,525 Undesignated Reserves / Working Capital (Fund 510) - - Capital Improvement Reserve (Fund 410)
$ 2,413,525 Total Sewer Fund(s) Reserves / Working Capital Airport Fund
FY 2026-27 Airport Fund Proposed Budget:

Revenues Expenditures
FY 2025-26 Estimated $ 252,535 $ 90,761
FY 2026-27 Proposed Budget $ 127,000 $ 62,789
The City’s Airport Enterprise Fund accounts for fiscal activity at the Willits Airport.

FY 2026-27 Airport Fund revenues are currently projected to be $126,000 lower than those anticipated to be collected during FY 2025-26 due to elimination of a one-time grant receipt from the FAA. FY 2026-27 Airport Fund expenditures are projected to be $28,000 lower primarily due to elimination of staff costs directly charged to the Airport consistent with the comprehensive update of the staffing allocation plan.

It is anticipated that the Airport Fund will have (-$207,341) in Fund Balance / Working Capital at the end of FY 2026-27. This negative amount in fund balance is expected to be amortized down over the next several fiscal years until a positive balance is in place.

Closed Landfill Fund
FY 2026-27 Closed Landfill Fund Proposed Budget:

Revenues Expenditures
FY 2025-26 Estimated $ - $ 188,015
FY 2026-27 Proposed Budget $ 174,431 $ 174,431
The City’s Closed Landfill Fund accounts for regulatory and fiscal activity at the Willits Closed Landfill.

FY 2026-27 Closed Landfill Fund revenues are currently projected to be $174,000 higher than those anticipated to be collected during FY 2025-26. Revenues include one-half of expected annual costs to be reimbursed by the County and one-half of expected annual costs to be paid from the City’s General Fund. FY 2026-27 Closed Landfill Fund expenditures are projected to be $14,000 lower primarily due to the lowering of staff costs directly charged to the Closed Landfill consistent with the comprehensive update of the staffing allocation plan.

It is anticipated that the Closed Landfill Fund will have (-$1,227,216) in Fund Balance / Working Capital at the end of FY 2026-27. Opportunities to mitigate this negative balance will be researched during FY 2026-27 and will include determining whether the City can collect one- half of annual costs from the County for previous fiscal years. Ultimately, any negative balances in this fund are likely to become liabilities of the General Fund, which also is responsible for one-half of the annual costs (General Fund transfers have not been complete for some time).

Special Revenue Funds – Transportation
There are two (2) Special Revenue Funds that account for transportation-related costs and projects. These funds consist of the following:
- Transportation Sales Tax Fund - RMRA SB-1 / Gas Tax Fund Sources of funding to these funds include a transactions sales tax collected specifically for transportation purposes, and allocations of state gas taxes and SB-1 (Road Maintenance & Rehabilitation Act) funding. Total revenues anticipated to be received for these two funds combined are approximately $1.1 million during FY 2026-27. When added to estimated beginning fund balances of approximately $75,000, there is a total of just under $1.2 million available for FY 2026-27 expenditures.

Total expenditures recommended for appropriation in the transportation-related Special Revenue Funds during FY 2026-27 are just under $643,000. Of this amount, $412,218 is allocated from the Transportation Sales Tax Fund and $230,690 is allocated from the RMRA SB-1 / Gas Tax Fund. Recommended appropriations in the Transportation Sales Tax Fund include staffing allocations, administrative overhead and $240,000 towards capital expenditures towards the following:
- East Valley Bridge Replacement - $120,000
- West Mendocino Phase II Design - $120,000
Recommended appropriations in the RMRA SB-1 / Gas Tax Fund include streetlight utilities costs; street maintenance supplies and materials and $139,190 towards capital expenditures related to Street Striping Projects. It should be mentioned that the Street Striping Projects are expected to be wholly funded by the RMRA SB-1 allocation estimated for FY 2026-27.

Fund balances in the RMRA SB-1 / Gas Tax Fund are expected to be negative at the end of FY 2026-27 due to a prior year over-funded for staffing costs from this fund. Also, the City will need to determine the viability of continuing to receive the RMRA SB-1 allocation (approximately $138,000 annually) due to not being able to meet the transportation-related “Maintenance of Effort” requirement necessary in the City’s General Fund (the City is required to spend no less than $291,474 annually from the General Fund towards streets / transportation costs – whereby ongoing actual and budgeted expenditures have been no more than $127,000 annually over the last three years). Assuming the City becomes ineligible to receive this funding, appropriations from the RMRA SB-1 portion of the Gas Tax funding will need to be moved to the Transportation Sales Tax Fund.

It is expected that the ending fund balance available at June 30, 2027 for these two funds combined will be just under $532,000, which may be used for future transportation purposes.

Special Revenue Funds – Capital Improvement
There are three (3) Special Revenue Funds that account for funding related to specific capital improvement activity. These funds consist of the following:
- General Plan Development Fund - Parks Improvement Fund - Citywide Capital Improvements Fund
During FY 2026-27, only the Citywide Capital Improvements Fund is expected to have any fiscal activity. Sources of funding into the Citywide Capital Improvements Fund include expected receipt of $805,000 from the $2.9 million Clean California Grant, which is expected to used over multiple fiscal years. The $805,000 grant funding is expected to be used for the following projects:
- Bud Snyder Park Restroom Remodel - $200,000
- Park Pavillion - $350,000
- Playground Equipment - $50,000
- Rec Grove Sidewalks & Trails - $25,000
- Solar Pedestrian Lighting - $180,000
Assuming all funding anticipated to be received and all recommended appropriations come to fruition during FY 2026-27, there will be just over $241,000 for all three funds combined available in total fund balances for future fund-specific capital expenditures.

Special Revenue Funds – Police-Related
There are five (5) Special Revenue Funds that account for funding received for Police-related services. These funds consist of the following:
- Narcotics Forfeiture Fund - H&S Restitution Fund
- Vehicle Abatement Fund - LEAA Program Fund
- DNA Cost Reimbursement Fund
Sources of funding to these funds include revenues collected from local, state and federal agencies which can only be used for Police-related purposes. Total revenues anticipated to be received for these five funds combined are $400 during FY 2026-27 – essentially interest earnings that is likely to accrue in the H&S Restitution Fund. Sources into this fund are not guaranteed and are only recognized budgetarily as they are received by the City. At the present time, there are no appropriations recommended from the Police-related special revenue funds during FY 2026-27.

Assuming all funding anticipated to be received and all recommended appropriations come to fruition during FY 2026-27, there will be approximately $199,000 available in total fund balances for future police-related expenditures.

Special Revenue Funds – Other
There are seven (7) Special Revenue Funds that account for funding related to specific programs for which these funds may only be used. These funds consist of the following:
- Planning CR and Grants Fund - Revolving Loan Program Fund - Housing Rehabilitation Loans Fund - PLHA Housing Fund - Business Rehabilitation Loans Fund - Lateral Repair Loans Fund - East Hill (Haehl Creek) Mitigation Fund
Sources of funding to these funds include revenues collected from local, state and federal agencies; and repayments of loans and payments from developers which can only be used for specific purposes. At the present time, there is no fiscal activity anticipated for any of these funds during FY 2026-27. The majority of these funds provide loans for specific program use based on eligibility. To the extent it is determined that any of these funds can be used during FY 2026-27, staff will seek approval from the City Council for authorization to process the loan.

Funds expected to be available at the end of FY 2026-27 which may be appropriated with City Council approval are as follows:
- Revolving Loan Program Fund - $42,710
- PLHA Housing Fund - $199,185
- Business Rehabilitation Loan Fund - $4,154
- Lateral Repair Loan Fund - $35,037
- East Hill (Haehl Creek) Mitigation Fund - $133,685
Agency Funds – Successor Agency
There is one (1) Agency Funds related to the City’s Successor Agency that account for former redevelopment obligations.

Funding for the Successor Agency Fund is provided by the State Department of Finance based on an approved distribution of former redevelopment property tax increment known as “RPTTF” (Funding from the Redevelopment Property Tax Trust Fund). Distributed funds are based on an approved Recognized Obligation Payment Schedule (ROPS) and may only be used for approved prior debts of the former Redevelopment Agency.

During FY 2025-26, all former redevelopment obligations where paid off, effectively eliminating the need to receive RPPTF moving forward. During FY 2026-27, all former redevelopment tax increment is expected to be recharacterized as secured property tax and distributed to appropriate taxing entities consistent with applicable property tax distribution (the City’s portion of the secured property tax will accrue to the City’s General Fund). There is currently just over $354,000 remaining in the Successor Agency Fund that will require research to determine the ultimate disposition of these funds. It is anticipated that these funds will need to be returned to the County for ultimate distribution back to appropriate taxing entities consistent with applicable property tax distribution.

CITY OF WILLITS
FISCAL YEAR 2026-27 PROPOSED BUDGET SCHEDULES
JUNE 29, 2026
EST. BEGINNING ENDING
FUND BALANCE / FUND BALANCE / Excess / (Deficit)
WORKING CAPITAL WORKING CAPITAL of Revenues
July 1, 2026 REVENUES EXPENDITURES June 30, 2027 over Expenses General Fund
100 - General Fund (Core) 399,269 $ 5,785,310 $ 6,436,329 $ (251,750) $ (651,019) $ 110 - Information Technology Fund (137,416) 229,099 209,300 (117,617) 19,799 150 - Measure K Fund 3,330,031 1,228,160 1,228,160 3,330,031 - Total General Fund (with Memo Funds): $ 7,242,569 3,591,884 $ 7,873,789 $ 2,960,664 $ (631,220) $ Enterprise Funds
510 / 410 - Sewer (105,407) $ 6,122,456 $ 3,603,524 $ 2,413,525 $ 2,518,932 $ 530 / 430 - Water 2,952,820 3,296,000 3,658,563 2,590,257 (362,563) 550 / 450 - Airport (271,552) 127,000 62,789 (207,341) 64,211 260- Landfill Dissolution (1,227,216) 174,431 174,431 (1,227,216) - Special Revenue Funds - Transportation
245 - Transportation Tax 316,271 $ 806,000 $ 412,218 $ 710,053 $ 393,782 $ 240 - RMRA / Gas Tax (241,483) 294,093 230,690 (178,080) 63,403 Special Revenue Funds - Capital Improvement
230 - General Plan Development 33,371 $ - $ - $ 33,371 $ - $ 420 - Parks Improvement 46,982 - - 46,982 -
400 - Citywide Capital Improvement Program 160,956 805,000 805,000 160,956 - Special Revenue Funds - Police-Related
222 - Narcotics Forfeiture 106,522 $ - $ - $ 106,522 $ - $ 223 - H&S Restitution 38,096 400 - 38,496 400
224 - Vehicle Abatement (5,256) - - (5,256) -
225 - LEAA Program (5,039) - - (5,039) -
226 - DNA Cost Reimbursement 64,462 - - 64,462 -
City of Willits
Budgeted Revenues / Expenditures / Fund Balance
Fiscal Year 2026-27 Proposed Budget
EST. BEGINNING ENDING
FUND BALANCE / FUND BALANCE / Excess / (Deficit)
WORKING CAPITAL WORKING CAPITAL of Revenues
July 1, 2026 REVENUES EXPENDITURES June 30, 2027 over Expenses City of Willits
Budgeted Revenues / Expenditures / Fund Balance
Fiscal Year 2026-27 Proposed Budget
Special Revenue Funds - Other
231 - Planning CR & Grants (9,158) $ - $ - $ (9,158) $ - $ 232 - Revolving Loan Program 42,710 - - 42,710 -
235 - Housing Rehabilitation Loans - - - - -
237 - PLHA Housing 199,185 - - 199,185 -
239 - Business Rehabilitation Loans 4,154 - - 4,154 -
250 - East Hill (Haehl Creek) Mitigation 133,685 - - 133,685 - 310 - Lateral Repair Loans 35,037 - - 35,037 -
Agency Funds - Successor Agency
600 - Successor Agency 354,627 $ - $ - $ 354,627 $ - $
Total Citywide Budget: 6,215,651 $ 18,867,949 $ 16,821,004 $ 8,262,596 $ 2,046,945 $

GENERAL
FUND
City of Willits
Fiscal Year 2026-27 Proposed Budget
General Fund Revenue and Expenditure Detail