City Works To Address $66 Million Budget Deficit

By Robert J. Hansen | OBSERVER Staff Writer

The City Council at its Tuesday meeting continued discussion of the proposed budget for fiscal year 2024-25 as it tries to address a $66 million deficit.

City Manager Howard Chan at the end of April released the proposed budget of approximately $1.6 billion for operations and capital improvements.

The budget addresses the city’s projected $66 million deficit through a combination of strategies, including revenue enhancements, prior-year savings, and expenditure reductions that largely eliminate vacancies and have a low or moderate impact on residents and communities.

It supports 5,029 full-time positions and eliminates no filled positions.

The plan in the proposed budget eliminates about 44 vacant full-time jobs.

“It has always been my goal to balance the budget by making strategic decisions instead of across-the-board cuts and to minimize – to the greatest extent possible – any impacts to core city services and city employees,” Chan said in a statement. “In my eight years as city manager, this has been by far the most dynamic budget to develop.”

The proposed budget maintains funding for key priorities such as homelessness and includes the continued operation of 1,350 shelter spaces and beds, staffing for the city’s incident management team that responds to homelessness and funding for the Affordable Housing Fee Credit program.

In closing the $66 million deficit, the proposed budget identifies $36.6 million in one-time strategies and $30.1 million in ongoing strategies. One-time strategies must be covered in the following fiscal year.

Among the one-time strategies are eliminating free rides on Regional Transit, reductions to ongoing projects and suspending the upcoming contribution to the city’s Economic Uncertainty Reserve (EUR).

On Monday, Mayor Darrell Steinberg released a letter recommending various spending restorations in the proposed budget.

The mayor said that in recent years the American Rescue Plan Act, the CARES Act and Measure U funds have made an unprecedented investment in Sacramento with purposeful focus on equity.

Steinberg said tens of millions of dollars have been allocated for affordable housing, youth, workforce development, climate action, arts and the creative economy, and inclusive economic development priorities throughout the city.

Additionally, funding was set aside for neighborhoods such as Del Paso, Northgate, and Marina Vista/Alder Grove, Steinberg wrote.

“While a deficit budget does not allow us to add more at this time, we must do our very best to protect these investments. Otherwise, the impacts of cuts and fee increases will be felt disproportionately and unfairly by people in communities who too often have been left behind,” Steinberg said.

The mayor proposed suspending the previous fiscal year’s EUR contribution, which would free up approximately $3.3 million to restore some of the proposed budget cuts and make crucial investments back into the city.

Among programs the mayor hopes to restore are the RT Fare-Free Youth Transit Program which would cost $250,000, and the Neighborhood Development Action Team at a cost of roughly $600,000.

The Neighborhood Development Action Team advances Sacramento’s commitment to racial equity by revitalizing commercial corridors through active engagement and collaboration with communities that have historically been overlooked. 

“A great recent example of this work is the Marysville-Del Paso Boulevard plan [called Forward Together] that was recently approved by the Council, as well as the Stockton Boulevard plan that will be coming forward for approval later this summer,” Steinberg wrote. “I propose fully funding this initiative and restoring the $600,000 to the NDAT budget.”

The City Council will adopt a final budget Tuesday, June 11.