What Do We Mean When We Say “Budget Gap”?
At its core, the City's budget gap is a simple, unavoidable concept: the costs of maintaining City services and operations are growing at a faster rate than the City’s current revenue streams.
This means in the coming years, the City will be required to reduce core community services if it does not implement new revenue streams.
The budget gap primarily affects services in the City’s General Fund, which supports public safety (Police and Fire), livability services (Library and Parks & Recreation), as well as various administrative support services.
Current Projections (2027 and Beyond)
- $4 million annually in existing operational costs that outpace revenue growth
- $16 million annually in debt service and lease costs for replacing critical City buildings
The scope of the budget gap is approximately $20 million, starting in 2027 and increasing every year after that.
What is Driving the Budget Gap?
- For 30 years, Measures 5 & 50 have hamstrung local governments in restricting their ability to increase revenues to keep up with core service costs.
- Costs of current operations continue to rise at rates higher than revenue.
- 6.4% growth in revenue anticipated in 2027
- 10.3% growth in expenditures (PERS rate increases, healthcare rate increases)
- This compounding gap is projected at $8 million for the next biennium ($4 million annually).
- The City has deferred maintenance and replacement of City facilities for decades. Funding needed for City facilities has been used over the years to maintain service levels the community expects, even in the face of increasing costs and economic downturns over those decades. The facility upgrades are now at a breaking point in order to maintain City operations and services.
Go back: The Budget Gap: 2027 and Beyond
