Title
Fiscal Year 2026/27 Proposed Budget Deliberation and Council Direction
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FileID
File ID: 2026-00781
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Location
Location: Citywide
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Recommendation
Recommendation: Deliberate and pass a Motion to provide Council direction regarding the Fiscal Year (FY) 2026/27 Proposed Budget (Budget).
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Contact
Contact: Peter Coletto, Director, (916) 808-5416, pcoletto@cityofsacramento.org; Mirthala Santizo, Budget Manager, (916) 808-5078, msantizo@cityofsacramento.org; Department of Finance
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Presenter
Presenter: Peter Coletto, Director, (916) 808-5416, pcoletto@cityofsacramento.org; Mirthala Santizo, Budget Manager, (916) 808-5078, msantizo@cityofsacramento.org; Department of Finance
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Attachments
Attachments:
1-Description/Analysis
2-FY2026/27 Supplemental Budget Information
3-Presentation (TBD)
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Description/Analysis
IssueDetail
Issue Detail: The City Charter, Article IX Section II, requires the City Manager to deliver budget recommendations no later than 60 days prior to the start of the new fiscal year. The Budget was released on April 29, 2026.
Over the course of four Council meetings in March 2026, departments conducted Early Budget Work Sessions (EBWS). The EBWS began with a presentation of the overall City budget context and fiscal challenge and different budget scenarios that City staff analyzed.
Departments provided budget-focused presentations focusing on the impacts of budget reduction decisions and alignment with Council priorities. On February 24, 2026, Council received the financial update for FY2025/26 and an updated 5-year forecast projecting a $66.2 million budget deficit for FY2026/27 with deficits increasing annually thereafter. The Budget is balanced and closes a $66.2 million funding gap.
On May 5, 2026, staff presented the Budget (including the FY2026/27 Capital Improvement Program [CIP] Budget) to Council (File No. 2026-00777). After the presentation and further discussion with staff, Councilmembers were requested to submit budget amendments memos for deliberation and staff direction on May 12, 2026.
At the 2:00 pm May 12th Council meeting, Council received an analysis of the 2026-2031 CIP (File No. 2026-00778), City fees and charges (File No. 2026-00923), and the application of the Budget Equity Tool (File No. 2026-00943). At the 5:00 pm May 12th Council meeting, Council reviewed Councilmembers’ proposed budget amendment requests. A motion was passed to restore the following budget reductions with the identified funding sources.
Council also directed staff to include the one-time restorations contingent upon a financing plan developed by staff for Council consideration from the following sources:
• Parks maintenance contract savings
• Freezing Community Ambassador stipends
• Reducing Commission Meetings (except for the Planning Commission)
• Department of Community Response Savings
• Reduced contribution to the Economic Uncertainty Reserve
The restorations include:
|
Budget Restoration |
Cost |
|
N. Sacramento Economic Development Project |
$259,923 |
|
N. Sacramento Code Enforcement Project |
$200,579 |
|
Hart Senior Center |
$273,893 |
|
Park Maintenance Worker Positions |
$567,428 |
|
Summer at City Hall |
$132,435 |
|
Violence Prevention Grants |
$275,000 |
|
YPCE Workforce Development Positions |
$107,150 |
|
TOTAL COST |
$1,816,408 |
Currently staff has identified the following financing strategies (subject to change upon further analysis):
• Parks maintenance contracts savings - $200,000 - Contracted services in certain Community Facilities District funded parks would be brought in-house. Dynamic staffing would be implemented to maintain service quality in existing parks.
• Freezing Community Ambassador Stipends - $108,000
• Department of Community Response Savings - $500,000 - The savings is a result of the current first choice safe parking site needing less infrastructure improvements than budgeted ($200k savings) and projected opening date generating operating savings vs budget in FY2026/27 ($300k savings)
• The remaining $1,008,408 would be covered by reduced Commission meeting savings (estimated at approximately $25,000 but is still being evaluated as of agenda publication) and a reduced contribution to the Economic Uncertainty Reserve (EUR).
For the last several fiscal years, the Economic Uncertainty Reserve (EUR) contributions have been used to balance the budget and for other purposes. Under the EUR policy, the City is required to have minimum reserve level of 10% of budgeted General Fund revenues. The EUR balance is estimated to be $88 million on July 1, 2026, which is approximately 9.2% of budgeted FY2026/27 General Fund revenues and below the target by $7,105,700. If this financing plan is utilized, at the end of FY2026/27, the EUR will be at 9.1% of General Fund revenues.
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PolicyConsiderations
Policy Considerations: The Budget maintains the direction provided by Council and prioritizes maintaining core City services and advancing Council priorities while closing the budget gap in FY2026/27. The Budget includes continued resources for essential core services and Council’s top three priorities, as identified on September 30, 2025, related to Economic Development, Homelessness, and Public Safety. The strategic approach to include specific revenue enhancements and expenditure reductions instead of simply pursuing across-the-board cuts minimizes program and service impacts to the community to the extent possible.
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EconomicImpacts
Economic Impacts: Not applicable.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): This report concerns administrative activities and government fiscal activities that do not constitute a “project” as defined by the CEQA Guidelines sections 15378 and California Public Resources Code section 21080 and are not subject to the provisions of CEQA (CEQA Guidelines section 15060(c)(3)). CEQA review for any project, which utilizes funds allocated under the FY2026/27 CIP Budget, has been or will be performed in conjunction with planning, design, and approval of each specific project as appropriate.
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Sustainability
Sustainability: None.
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Commission/Committee Action
Commission/Committee Action:
Budget and Audit Commission: The Budget and Audit Committee will review the Budget and any other budgetary changes from previous Council meetings on May 26, 2026.
Planning and Design Commission: Sacramento City Code Section 17.912.010 requires the Planning and Design Commission to review the City’s five-year CIP for consistency with the City’s General Plan and to report its findings to the City Council. The 2026-2031 Proposed CIP was presented to the Commission on April 23, 2026. The General Plan Consistency Memo will be included in the Adopted Budget staff report.
Measure U Commission: The Budget and CIP were presented to the Commission on May 18, 2026.
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RationaleforRecommendation
Rationale for Recommendation: The actions recommended in this report would allow staff to make modifications to the Budget and/or CIP.
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FinancialConsiderations
Financial Considerations: The Budget is balanced and reflects adopted Council policies, goals, and planning/programming guides. Any direction Council provides would need to ensure that the Budget remains balanced.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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