The City Council held a budget study session on May 7, 2025, starting at 9:15 AM, to review the proposed 2025-2026 operating budget, the economic outlook, and the Community and Economic Development (CED) city service area. The session featured detailed presentations from Budget Director Jim Shannon and Deputy Director Bloggy Salalic, followed by council questions and discussion. Key topics included a $35.6 million general fund shortfall, the reallocation of Measure E funds, economic challenges, and investments in affordable housing and community services.
All right, good morning, everyone. We're going to call to order this budget study session here on the morning of May 7th. Welcome. Good to see everybody. Tony, let's call the roll. Kimai? Campos? Cellas. Cohen. Ortiz. Present. Well, Kehi. Here. Kendallis. Here. Casey. Fully. Here. Mayhan. Here. Great. Thank you. Uh, just want to quickly kick off by sincerely thanking city staff for all of the work that goes into putting together the budget. I don't think any of us, myself included, really fully grasp how hard this team works. So, Jim, uh Bonnie, uh, thank you uh to you and the entire team for how much you guys do to uh make sure we are managing our dollars as effectively as we possibly can, helping the council make uh really good decisions and just um you guys just do a phenomenal job. I also think we're very lucky to have a city manager who used to be the uh our our budget director. Um she's always coming up with creative solutions, and uh want to thank Jennifer and Lee and everybody as well. It's just uh been great to work closely on the budget process, and you guys give me a lot of confidence, uh, even when we come in facing uh a projected deficit that we'll find a way to to close that deficit without unduly burdening our workforce or our community. And I think you all have helped us uh be creative and navigate this really well. So we are heading into the study session process. This is an opportunity for the council to hear a lot of analysis and detail from our city manager and and her team and her budget office and really understand how the administration is responding to the needs of the city, um, to the March budget message and where they are heading with I know we have a lot of new council members going through this for the first time, where they are heading with the next fiscal year budget, and it's the perfect opportunity for us. It is a study session to ask questions, learn, and just make sure we all have a good sense of the trade-offs that are being made and how we are using our limited tax dollars to drive maximum impact, particularly within our five focus areas. So, again, want to thank Jennifer uh and the whole team. I'll turn it over to our city manager to say a little more. Thank you very much, Mayor, and good morning to you all. Uh today we are proud to deliver the 2526 proposed operating budget, which I believe is a very fiscally responsible and balanced budget that meets the important objectives of the city council while also structurally aligning the general fund with minimal community or employee impacts. This budget follows the direction provided by the mayor and city council with their approval of the mayor's March budget message for fiscal year 2526 and considers other city council and administration priorities, recent community outreach and surveys, and the impacts of service reductions to the community. While the 2526 shortfall of 35.6 million in the general fund represents a relatively modest portion of the general fund base budget at 3%, decisive action is needed now to ensure a structurally aligned balanced budget given the additional $52.9 million shortfall anticipated the following year and recent actions by the federal government that are contributing to economic and funding uncertainty. The city must also make a select number of new investments to address the city council's most urgent priorities and address key areas of organizational risk. Keeping these considerations in mind, the proposed budget follows City Council direction to focus on targeted strategic spending while fully resolving the shortfall in 2526 and cutting in half the additional shortfall forecasted for 2627, reducing it from approximately 53 million to 26 million the following year. It is important to note that with the position eliminations necessary to address the shortfall. Less than 15 employees will be impacted from actions in this proposed operating budget, and there will be no layoffs for employees who have rights to other positions. Throughout the study sessions today, tomorrow, and next week, which will cover not only the proposed operating budget, but the proposed capital budget and capital improvement program and proposed fees and charges. I'm very grateful for the hard work of all of our departments and the budget office to produce such comprehensive budget documents. I do want all the budget office staff to stand to just get it recognized by the city council. So if you all you've got kind of spread out here, could you please stand and let's give you all a round of applause? And you guys over here too. Jim and Selena and all you guys. So they are really an absolute phenomenal team, and I know how hard they work personally given my uh 26 years working on budgets over my career in the butt actual budget office. But uh thank you all to the budget team, you're fabulous.