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HomeMy WebLinkAboutStaff Report 2506-4817CITY OF PALO ALTO Finance Committee Regular Meeting Tuesday, August 19, 2025   Agenda Item     2.Recommendation to the City Council to approve FY 2026 budget amendments to reduce appropriations by approximately $6.2 million. CEQA Status - Not a Project. Staff Presentation Finance Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: August 19, 2025 Report #:2506-4817 TITLE Recommendation to the City Council to approve FY 2026 budget amendments to reduce appropriations by approximately $6.2 million. CEQA Status - Not a Project. RECOMMENDATION Staff recommend the Finance Committee advance to the City Council consideration and approval of the FY 2026 budget amendments to reduce appropriations by approximately $6.2 million. EXECUTIVE SUMMARY To proactively plan for economic uncertainty and address longer term deficits, as part of the FY 2026 Budget Process, the City Council directed staff to return with specific reduction actions across the General Fund, totaling $6 million, with at least $2 million in on-going savings and $4 million one-time savings. The budget reductions can be a mix of General Fund operating budget reductions or capital project deferrals or reductions. Staff’s recommended reductions outlined in this report, summarized by department, achieves $6.2 million in savings in FY 2026, of which $3.4 million are ongoing and $2.8 million are one- time and the total reflects about 2% of the City’s General Fund budget. The recommendations prioritize core services while balancing impacts to the extent possible largely through reducing vacant positions. Capital project savings are achieved by reducing the annual base General Fund transfer to the Capital Improvement Fund and supported by revisions to the 5-year Capital Improvement Plan (CIP), as proposed for specific projects. The revised Capital Improvement Fund ending balance is projected above the $3 million target annually, except in FY 2026 which is projected at $2.5 million. This memo includes the detail of the proposed $6.2 million savings, along with anticipated impacts, for Finance Committee consideration with a plan to advance the Finance Committee’s recommendation to the City Council for approval on September 8, 2025. As actual financial results from staffing changes and/or CIP projects will differ from this plan, the FY 2026 Mid-Year Budget Review will further refine the budget accordingly. In summary, the recommended reductions reflect impacts across all departments, limiting service impacts largely by eliminating vacant positions, prioritizing continuity of services and changes already contained in the adopted budget. These recommendations advance Council Priorities, evolve services approaches such as reducing transportation consultant contracts while augmenting staffing resources and limiting contracts to annual appropriations with expense controls for information technology, planning and transportation consultants. Additionally, capital project savings are captured while acknowledging ongoing expense and schedule variability associated with construction. Table 1: Summary of $6.2 Million Savings Funds FY 2026 Total FY 2026 On-going FY 2026 One-time FY 2027 FY 2028 General Fund $3.0M $2.4M $0.6M $2.4M $2.4M Capital Improvement Fund $3.2M $1.0M $2.2M $1.0M $1.0M Total $6.2M $3.4M $2.8M $3.4M $3.4M BACKGROUND On June 16, the City Council adopted the $1.0 billion FY 2026 budget (Staff Report #2503-42501) including the General Fund Budget of $313.0 million and capital budget of $312.9 million across all funds. The five-year 2026-2030 Capital Improvement Plan (CIP) is $1.1 billion. These adopted budgets included $6.0 million of anticipated savings, comprised of $2.8 million in operating savings and $3.2 million to reduce the transfer from General Fund to the Capital Improvement Fund, with direction to return to the Finance Committee with specific recommendations in August 2025. The FY 2026 Adopted Budget resulted in a projected General Fund Budget Stabilization Reserve of $54.3 million or 17.7%, slightly below the Council’s target of 18.5% and within the recommended range of 15-20% of General Fund Expenditures. Furthermore, as part of a multi- year budget balancing strategy, Finance Committee recommended in FY 2027 to combine the Uncertainty Reserve with the BSR and increase the overall reserve. Moving $4.0 million of the Uncertainty Reserve into the BSR in FY 2027 would bring the BSR up to $58.3 million or 18.3% of the estimated FY 2027 expenses. This would leave $2.0 million in the Uncertainty Reserve to partially offset the projected $8.0 million deficit in FY 2027 projected at the time of budget adoption. 1 City Council, June 16, 2025; Agenda Item #23; SR#2503-4250: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=83462 ANALYSIS Proposed Reductions - General Fund (by Department): Total General Fund reduction of $3.0M of which $2.4M is on-going and $0.6M is one-time. Table 2: Summary of Department Reductions Department % of FY 2026 General Fund Budget Proposed Reduction On-Going One- Time Description Department % of FY 2026 General Fund Budget Proposed Reduction On-Going One- Time Description Office of Transportation 1.7%$66,754 $66,754 Use Measure B funding for Planner (1 FTE) for SRTS program (40% General Fund sourced) Planning & Development Services 1.3%$325,428 $166,886 $158,542 Planners (2 FTE) (1 ongoing, 1 one-time) Police 0.4%$254,654 $254,654 Reserve Officer (0.12 FTE), eliminate hire ahead, and reduce general expenses Public Works 0.7%$192,374 $192,374 CIP Staff (1 FTE) and Tree Trimmer (1 FTE) Public Works Vehicle Fund $460,000 $460,000 FY 2026 fire engine diesel instead of hybrid TOTAL $3,037,320 $2,418,778 $618,542 Brief Service Impact: -Administrative Services Department (ASD) – Division Manager (1 FTE): This action will freeze an ASD division manager position in the Revenue Collections Division, which impacts division oversight and management. The Revenue Manager position is vacant and in FY 2026, division management and oversight will be supported through acting role assignment(s). ASD is reviewing organizational structure and service delivery models during this time, in order to maximize efficiencies while managing operational risks. -City Attorney - General Expense Reductions: This action will reduce general support expenses which could be absorbed with the current complement of staffing. -City Auditor – General Expense Reductions: This action will reduce the contract value by a manageable amount and may impact task-order assignments and/or scope of audits. -City Clerk – General Expense Reduction: This action will reduce general expense by a manageable amount and may impact existing contracts and/or general support expenses. -City Manager – Senior Management Analyst (1 FTE): This action affects a filled position and eliminates a dedicated citywide resource for Wellness and Belonging. With the Wellness and Belonging Action Plan still being implemented, the remaining work will be integrated between the City Manager’s Office and Human Services, advancing actions that align with existing programs, services, and other priorities as resources allow. This will result in an overall reduction in capacity and centralized focus to advance priorities, including discontinuance of regular reporting on the Action Plan. -Community Services Department (CSD) – o Junior Museum & Zoo (JMZ) Program Assistant (1 FTE): This action will eliminate a vacant Program Assistant I position at the JMZ, which was added during the FY 2025 Mid-Year Budget Review. The position was intended to support customer service, oversight of membership, reservation booking, event coordination, and admissions. To address these responsibilities, CSD will utilize a recently hired Program Assistant I from the Lucie Stern Community Center to assist with these tasks for up to 50% of their time. The amount of time that the Lucie Stern Program Assistant can devote to the JMZ is to be determined and may impact program revenues and/or support for visitor services and events at the JMZ, and reflects a reduction in customer service capacity for these functions. o JMZ Access Coordinator (0.48 FTE): This action removes a vacant JMZ Access Coordinator (Staff Specialist) position that was added during the FY 2024 Budget Process and funded through a grant for two years with an expected transition to the General Fund. With the grant period concluded, the position will be eliminated. Outreach capacity in underserved communities such as East Palo Alto, Menlo Park, and Redwood City will be reduced as the role previously supported building relationships with community partners, developing inclusion strategies, and raising awareness of JMZ programs. These efforts may continue at a smaller scale or be shared among existing staff. o Contracts & General Expenses: A review of the Pets-in-Need (PIN) contract terms and corresponding budget determined that the original budget allocation exceeded the contract value. Alignment of this budget will not impact the current service levels. In FY 2026, the frequency of printed and mailed catalogs will decrease from four times per fiscal year to twice. In FY 2027, the catalog will transition to an online-only format. Funds remaining after this adjustment will be used to send postcards to residents multiple times throughout the year as reminders about sign-up periods and to direct them to the online catalog. -Fire – Trainees (2 FTEs): The Fire Department reductions include eliminating two of the three Firefighter Trainee positions. These positions were added in FY 2023 to create a hiring pipeline and allow for vacancies to be filled sooner, thereby reducing overtime costs and mandatory overtime for current firefighters. However, these trainee positions have been vacant except recently when several current staff were temporarily on limited assignment duties. This action will retain one of the three trainee positions for flexibility and enable the Department to maintain current service levels while continuing to hire and train firefighters as needed to fill vacancies in the absence of these positions. -Human Resources – HR Technician (1 FTE): Freezing this position will impact vacancy management, including the capacity to manage recruitments, and will delay start of recruitments for vacated positions. Support for the HR Liaison Program may decrease, lowering the quality and consistency of HR support across the organization. Longer-term risks to recruitment operations may include the City’s ability to maintain responsive and strategic workforce planning process. Careful monitoring, adaptive planning, and continued evaluation of staffing needs will be essential to minimize disruption and maintain core recruitment services. -Employee Benefit Fund– This action would shift the funding of two human resources positions (Benefits Manager and Senior HR Administrator) to the Employee Benefit Internal Service Fund (ISF). This would offset 50% of those costs to the centralized ISF and better align the roles, duties and cost allocations. -Information Technology – Information Technology Manager (1 FTE): This action will freeze one vacant Information Technology Manager. The recently filled Assistant Director will mitigate some of the impacts of this position which has been vacant since May 2025 due to staff retirement. This IT Manager is responsible for IT Governance and project assignments. The will reduce overall capacity to manage and execute identified projects. -Library – Library Associate (1 FTE) and General Expenses: Freezing one vacant Library Associate will reduce staffing flexibility at smaller branches (e.g., Downtown, College Terrace, and Children’s), particularly on weekends and during public programs. Core functions like customer service, technology support, and facility oversight will be absorbed by flexing responsibilities among existing staff. This will stretch capacity and limit the Library’s ability to maintain programming or respond quickly to community needs. Library staff will continually assess staffing allocations to minimize visible service impacts. Additionally, the general expenses reduction in collections will result in fewer new materials and longer wait times for patrons to obtain popular print titles. Digital collections — especially on high-use platforms like Kanopy, Hoopla, and OverDrive — will also see delayed expansion. This follows recent funding losses from state and regional library partners, which the Library has already absorbed by cutting lower-use resources. -Office of Emergency Services (OES) - General expense reduction: The Office of Emergency Services is in the midst of moving to the new Public Safety Building (PSB), and it is anticipated that there will be a few expenses that are still needed for the full functionality of the new space. These anticipated expenses in FY 2026 will be difficult to absorb with the limited budget flexibility. To mitigate this, the Department will defer certain expenditures during the budget reduction period, while working around any deficiencies. -Office of Transportation – Planner (1 FTE): On June 16, 2025, Santa Clara Valley Transportation Authority (VTA) approved the use of Measure B Local Streets and Roads (LSR) funding for a Planner position working the elementary school Safe Routes to School (SRTS) program. Using LSR funding for SRTS has no direct service impact beyond the City having less funding available for street maintenance. The City’s average pavement condition index (PCI) is above 80, which allows LSR funds to be used for other transportation related programs. -Planning and Development Services – o Planner (1 FTE): The Current Planning program has operated with staff vacancies in the last four years and the remaining six planners will continue to focus on application processing and meeting statutory deadlines. Code development and updates – such as the upcoming SB9 ordinance and recently directed telecom work - that was previously supported by this program will transition to the Long- Range Planning function. o Planner (1 FTE, One -Time): The Long-Range Planning program will delay current and uninitiated Council priorities. The remaining six planners will prioritize Housing Element implementation and state mandated requirements to meet timeframes for compliance. As a result of both staffing and consultant services impacts, workload reassignments will occur noting impacts to the following projects: Matadero Creek Affordable Housing Options, Innovative Housing Typologies, and ordinance updates for seismic safety and retail. -Police – o Hire Ahead Program: This is a new program in FY 2026; eliminating this program has no anticipated immediate impacts to current service level. Currently, there are seven (7) sworn position vacancies to focus on filling. o Reserve Officer (0.12 FTE): Retired full-time police officers can serve as part-time reserve officers, benefiting the community with their experience. These positions often handle tasks such as transporting prisoners to and from the jail in San Jose, which allows full-time officers to remain available for service in the city. Additionally, they may work traffic roles during Stanford events. Eliminating one vacant reserve position is unlikely to significantly affect service levels or the quality of police services. However, there may be a modest impact on overtime costs for events like Stanford Athletics, which are subject to a cost-sharing agreement with the university. o General Expenses: This category of services consists of several small programs that collectively represent a modest expense. The most significant program is the regular maintenance of a backup analog radio system, which the Department recommends pausing indefinitely. The primary digital system already includes built-in redundancy and is highly reliable. Notably, most cities in the county do not utilize an analog backup system. Other affected programs include a scouting explorer program, citizens academy, and various community service initiatives that were offered pre-pandemic, when the department had more authorized police officers, but have not been offered since. Given that the Department does not expect to be able to restore authorized officer positions to pre-pandemic levels in the coming years, these programs would be expected to remain unavailable. As a result, the community is not expected to experience any immediate changes in service levels. -Public Works – o Tree Trimmer (1 FTE): The Public Services Urban Forestry Division has seven tree trimmer positions and one lead position with two tree trimmer positions currently vacant. Eliminating one of the positions while continuing to leverage the City’s tree trimming contract, currently through West Coast Arborist, should have only a modest impact on the annual maintenance of the City’s trees. The contract term is through October 17, 2026. The tree trimming program has a goal of maintaining trees on a 7-year cycle. While the position reduction can be expected to reduce the number of trees maintained annually, Urban Forestry staff will track the tree trimming cycle to ensure there are no significant negative effects. The reduction is also expected to have some impact on Palo Alto 311 tree-related response times, staff availability for after-hours emergency response, and tree planting. o Capital Program Staffing, Engineer (1 FTE): The position proposed to be eliminated in the Engineering Services Division is one of six positions involved in construction of streets, sidewalks, and transportation capital projects. As part of the overall $6 million reduction in FY 2026, $3.2 million of capital projects are recommended to be deferred from FY 2026 to future years of the 5-year CIP, and the proposed FY 2026 capital budget included a one-year reduction in the sidewalks project. Workload needs should not be impacted in FY 2026; however, impacts to projects in future years of the 5-year CIP may happen due to reduced staff capacity to manage projects. -Vehicle Fund o This recommends the purchase of one (1) diesel fire engine instead of an electric hybrid engine in the FY2026 vehicle replacement CIP project. In the FY 2025 project, the City’s first hybrid fire engine purchase is planned, although costs and equipment lead times remain under consideration before finalizing the decision. The shift from hybrid to diesel in FY 2026 for the second apparatus would yield one-time cost savings. Proposed Reductions/Deferrals – Capital Improvement Fund (by Project): As part of the FY 2026 Adopted Budget and the 2026-2030 CIP, the General Fund base transfer to the Capital Improvement Fund was reduced by $3.2 million in FY 2026, $1.0 million in FY 2027, and $1.0 million in FY 2028, along with placeholders for capital expenditure reductions in the same amounts. Those placeholders are now recommended to be removed and replaced with reductions/deferrals assigned to specific capital projects. The table below summarizes the recommended capital project modifications and revised ending CIP fund 471 balance. These modifications are based on current available information to continue work on other capital projects with higher priority needs. Staff manages risks in capital projects by adding contingency funding to project budgets; however, factors such as higher than anticipated bids, unforeseen site conditions, and weather can cause the need to augment project budgets by more than the original contingency funding and cause time delays. For this reason, staff recommends maintaining a minimum level of funding in the Infrastructure Reserve (IR) ($3.0 million goal) in order to augment capital projects when unforeseen outside factors occur. Increasing contingency amounts on individual projects is also an option, but this would further limit available funds and lower the number of projects that would be scheduled. Staff recommends maintaining the IR close to $3.0 million and keeping contingencies on individual projects at 10%. Table 3: Summary of Capital Project Reductions/Deferrals Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Proposed Modifications: PF-93009 ADA Compliance – reduce appropriation ($150,000) OS-09002 Baylands Levee Repair (defer to FY 2028) ($288,000)$288,000 PG-06001 Athletic Court Resurfacing ($50,000) PG-06003 Benches, Signage...& Site Amenities ($50,000) Description FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 PE-26000 Foothills Nature Preserve Restroom ($300,000)($900,000)$100,000 $600,000 OS-09001 Off-Road Pathway Repair ($75,000) PE-21002 Johnson Park ($250,000)($1,400,000)$1,700,000 PG-22000 Werry Park Playground ($350,000)$350,000 PE-13014 Streetlight Condition Assessment ($220,000)$220,000 PL-14000 Churchill Ave (Measure B) ($2,500,000) TOTAL ($3,933,000)($1,700,000)$1,658,000 Revised Ending Capital Improvement Fund Balance $2,528,380 $4,901,793 $6,842,188 $7,225,119 $12,025,871 Project Brief Discussions: -PF-93009 American Disability Act Compliance – reduce appropriation from $600k budgeted to $450k. While deferred funding would delay progress on accessibility upgrades, funding is reserved for time-critical needs such as code required improvements identified for active construction projects or urgent path-of-travel corrections. -OS-09002 Baylands Levee Repair (defer from FY2026 to FY 2028) –While postponing could increase the risk of deterioration, this deferral allows concentration of resources on higher priority projects. In the interim, routine inspections and maintenance protocols will be maintained to mitigate risk until the project resumes in FY 2028. -PG-06001 Athletic Court Resurfacing – reduce appropriation from $365k to $315k, while continuing repairs in FY 2027 through FY 2030 at about $240k annually. Although the reduction may delay or extend schedules for full court resurfacing enhancements, the phased repair strategy ensures that safety and usability improvements continue on an annual basis through FY 2030. This approach balances short-term fiscal limitations with the ongoing need to maintain athletic facilities. This work safeguards user safety and extends the lifespan while addressing time-sensitive maintenance needs. Maintenance treatments like applying an overcoat at the right time can add five to seven years of useful life to the pavement, delaying the need for full reconstruction and significantly reducing lifecycle costs. -PG-06003 Benches, Signage, Walkways, Perimeter Landscaping, & Site Amenities – reduce appropriation from $262k to $212k. While reducing the scope and budget will limit the number of immediate upgrades to park aesthetics and user amenities, it preserves critical funds for essential maintenance and high priority projects across the parks. This ensures that while some enhancements might be scaled back or deferred, the continued investment in core operational and safety improvements is maintained, supporting overall user experience and facility functionality in the short term. -PE-26000 Foothills Nature Preserve Restroom – Defer replacement of three restrooms at Foothills Nature Preserve by one year (from FY 2027 to FY 2028) to focus on more time-sensitive projects. Staff will monitor conditions to ensure restrooms remain safe and functional in the interim. -OS-09001 Off-Road Pathway Repair – reduce appropriation from $208k to $133k, while continuing repairs in FY 2027 and FY 2028 at $185k and $208k, respectively. The reduced budget will limit number of the off-roads paved trail segments addressed and will still enable repairs at the most degraded sections with safety concerns. Maintaining on-going funding addresses overall network usability and prevents further deterioration of Palo Alto’s nine miles of off-road paved trail system that are 35 years old. -PE-21002 Johnson Park – Defer from FY 2026 and FY 2027 to FY 2028, renovation of existing park elements including asphalt concrete and pathways, furnishing and playground equipment and resurfacing, fencing and irrigation to focus on more time- sensitive projects. Staff will continue to monitor safety and accessibility needs in the interim and as a contingency plan use the ADA Compliance capital project to make any emergency repairs needed as a stop gap. -PG-22000 Werry Park Playground – Defer by two years from FY 2026 to FY 2028, replacement and accessibility improvements of existing playground to focus on more time-sensitive projects. While the deferred funding would postpone the replacement and accessibility improvements of the Werry Park playground by two years, the existing play area remains serviceable and safe for use. The delay allows for advancement of higher-priority playgrounds and infrastructure with more critical needs, while maintaining Werry Park in the capital queue for future improvements. -PE-13014 Streetlight Condition Assessment – Defer $220k funding for comprehensive assessment from FY 2026 to FY 2028 while retaining funding in the Street Light Improvements project (PO-05054) to replace street light poles, foundations, luminaries and wiring as needed. -PL-14000 Churchill Ave – Funds design and construction of enhanced bikeways, shared- use paths, bicycle parking and pedestrian improvements and a construction contract was awarded on December 9, 2024 (Report #2410-3613), with the contractor began mobilizing in Summer 2025. For costs incurred in FY 2025, Staff proposes to utilize Measure B which VTA manager provided verbal approval, noting formal application and written approval are required for VTA official determination. Staff would consider two categories of eligibility: congestion relief or pavement rehabilitation. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: August 19, 2025 www.paloalto.gov Recommendation to City Council To Approve FY2026 Budget Amendments to Reduce Appropriations by Approximately $6.2 Million Finance Committee Item #2 FINNACE COMMITTEE REVIEW FY 2026 BUDGET AMENDMENT OVERVIEW Review and discuss the FY 2026 budget amendments to reduce specific appropriations by $6.2 million. •Budget Background / Calendar •Executive Summary •Review General Fund recommendations •Review Capital Improvement Fund recommendations GOAL:Recommend to the City Council budget amendments for consideration on September 8, 2025. 2 BUDGET CONVERSATIONS & CALENDAR 3 MAY 5 MAY 6 & 7 MAY 12 MAY 20 JUNE 4 JUNE 16 Finance Committee Budget Workshops: Review the proposed budgets and recommend amendment(s) Study Session City Council: Finance Committee check-in with the City Council Finance Committee: Review and recommend $6.2M budget appropriation reduction actions City Council: FY 2026 Proposed Budget Overview: Discuss guidance for Finance Committee colleagues City Council Budget Adoption: Adopt Operating & Capital budgets (as amended by the Finance Committee) Finance Committee Budget Wrap-up: Based on the input from the May budget meetings, recommend final adjustment(s) to proposed budgets for Council adoption AUG 19 SEPT 8 Non-Profit Workplan Phase I: May 9 - Proposal deadline May 28 & June 4 – Policy & Services review & recommend awards City Council: Adopt $6.2M budget appropriation reduction actions •Council Direction: Retain reserves, reduce budget gap, prepare for economic uncertainty. •Reduce General Fund budget by $6 million, with $2+ million on-going. •Recommendation: $6.2 million in savings (2% of General Fund budget) – $3.4M ongoing and $2.8M one-time •Prioritize core services and changes contained in the adopted FY26 budget while balancing impacts to the extent possible largely through vacant positions Executive Summary 4 •Capital Project savings are achieved through reducing annual base transfer from General Fund to Capital Improvement Fund while balancing capital project delays and exacerbating costs and acknowledging ongoing expense and schedules may vary associated with construction. •Continue to evolve service approaches such as reducing use of consultants, while augmenting staff resources and limiting contracts to annual appropriations with expense controls for IT, planning and transportation consultants. •Council approval scheduled for Sept 8 and any true-up at FY26 Mid-Year. Executive Summary 5 6 Appropriation Reductions - Recommendation Fund FY 2026 Total FY 2026 On-Going FY 2026 One-time FY 2027 FY 2028 General Fund $3.0M $2.4M $0.6M $2.4M $2.4M Capital Improvement Fund $3.2M $1.0M $2.2M $1.0M $1.0M Total $6.2M $3.4M $2.8M $3.4M $3.4M Council Direction: General Fund budget reduction of $6 million. At least $2 million on-going and $4 million one-time. General Fund Reductions by Dept $3.0M total: $2.4M on-going, $0.6M one-time 7 Dept FY 2026 % of GF Budget Proposed Reduction On-Going One-Time Description ASD 1.4%$161,663 $161,633 Division Manager (1 FTE) 60% GF ATTY 0.5%$25,000 $25,000 General Expenses AUDITOR 3.5%$25,000 $25,000 General Expenses CLERK 1.6%$25,000 $25,000 General Expenses CMO 3.3%$176,081 $176,081 Senior Mgt Analyst (1 FTE) CSD 0.8%$332,328 $332,328 JMZ Prog Asst (1 FTE), JMZ Access Coord. (0.48 FTE), Elim printing contracts, reduce gen expenses General Fund Reductions by Dept $3.0M total: $2.4M on-going, $0.6M one-time 8 Dept FY 2026 % of GF Budget Proposed Reduction On-Going One-Time Description Fire 0.5%$324,609 $324,690 Fire Fighter Trainees (2 FTE) HR 2.3%$133,640 $133,640 HR Technician (1 FTE) Benefit Fund $182,801 $182,801 Shifts HR positions (2 FTE) to Employee Benefit Fund (ISF) IT 1.2%$151,402 $151,402 IT Manager (1 FTE) 50% GF Library 1.4%$175,587 $175,587 Library Associate (operations) (1 FTE) reduce general expenses OES 1.4%$25,000 $25,000 General Expenses OOT 1.7%$66,754 $66,754 Use Measure B funding for Planner (1 FTE) for SRTS program 40% GF General Fund Reductions by Dept $3.0M total: $2.4M on-going, $0.6M one-time 9 Dept FY 2026 % of GF Budget Proposed Reduction On-Going One-Time Description PDS 1.3%$325,428 $166,886 $158,542 Planners (2 FTE) (1 ongoing, 1 one-time) Police 0.4%$254,654 $254,654 Reserve Officer (0.12 FTE), eliminate hire ahead, and reduce general expenses Public Works 0.7%$192,374 $192,374 CIP Staff (1 FTE), Tree Trimmer (1 FTE) Vehicle Fund $460,000 $460,000 Shift from electric hybrid to diesel fire engine TOTAL $3,037,320 $2,418,778 $628,542 Capital Project Reductions/Deferrals 10 CIP Projects Proposed Modifications FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 ADA Compliance – reduce funding, focus on active projects & path-of-travel ($150,000) Baylands Levee Repair – defer to FY 2028 ($288,000)$288,000 Athletic Court Resurfacing – delay full court resurfacing, focus on user safety ($50,000) Benches, Signage… & Site Amenities – reduce appropriation, focus on critical projects & essential maintenance ($50,000) Foothills Nature Preserve Restroom – defer replacement from FY27 to FY28, focus on safety & function ($300,000)($900,000)$100,000 $600,000 Capital Project Reductions/Deferrals 11 CIP Projects Proposed Modifications FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Off-Road Pathway Repair – reduce appropriation, focus on degraded section & safety ($75,000) Johnson Park – defer to FY28, monitor safety and accessibility (ADA compliance project funding) ($250,000)($1,400,000)$1,700,000 Werry Park Playground – defer to FY28, remains serviceable and safe for use. ($350,000)$350,000 Streetlight Condition Assessment – defer comprehensive assessment to FY28, retain funding for repairs & improvements. ($220,000)$220,000 Churchill Ave (bike/ped) – use Measure B for FY25 costs incurred ($2,500,000) TOTAL Reductions/Deferrals ($3,933,000)($1,700,000)$1,658,000 $100,000 $600,000 Revised Ending Capital Impr Fund Bal.$2,528,380 $4,901,793 $6,842,188 $7,225,119 $12,025,871 Recommendation 12 Staff recommend the Finance Committee advance to the City Council consideration and approval of the FY 2026 budget amendments to reduce appropriations by approximately $6.2 million. Scheduled for September 8 City Council meeting