City Manager's Update / April 2025 | | |
A quick glance at the news these days shows the chaos that is happening in the economy because of actions taken by the federal government. Considering the uncertainty we face, our City organization must continue to be cautious as we budget and plan for the future. That’s why, despite cost pressures we’re experiencing that range from new labor agreements to rising insurance premiums and utilities, our City staff team put forward a proposal at the City Council Budget Study Session earlier this week that proposed no change to the Fiscal Year 2025-26 budget developed last Spring. Instead, the intention is to absorb these costs across Departments and to ensure we continue to operate with a balanced operating budget.
As City staff reported to the City Council, to ensure a balanced operating budget beyond our two-year budgeting cycle, larger adjustments may be needed in the future. The findings from the Citywide Fee Study and Cost Allocation Plan that are underway now will help inform the Council’s decision making, as will the planned Citywide Service Delivery Study that would provide benchmarking and analysis to inform any structural changes.
The good news is that the City’s General Fund reserves (our “savings account”) remain extremely healthy, and total above 43% of expenditures. The City Council will consider what expenses or investments are worth making from reserves, including how much to dedicate for vehicle and equipment replacement needs, deferred maintenance costs, adding to the Section 115 Pension Trust to address pension costs, and/or funding other one-time needs. Following the discussion at the Budget Study Session, the City staff team will be preparing options for the City Council to consider at an upcoming meeting.
The next two-year budget that we’ll begin developing later this year will be an opportunity to use data to ensure the City operates without an operating deficit not just one year at a time, but looking forward many years. We’ll be able to do that thoughtfully by incorporating the findings of the Cost Allocation Plan, and also by revamping our approach to saving for vehicle and equipment replacement needs, managing the Capital Improvement Program, and more. And of course, we will seek input from the Financial Advisory Board and will hold public meetings and workshops to hear from you, our community.
So while we must continue to hunker down through this next fiscal year, we are doing so with strong reserves and from a position of strength. Despite the economic headwinds we may be facing, we will continue to be fiscally disciplined and our current mindset is to show patience, not panic. I am extremely proud of the financial strides we’re continuing to make as an organization and I’m optimistic about the additional improvements we’re planning to include in the next biennial budget.
Until then, with City Council’s leadership, we’ll focus on getting through the next fiscal year without the use of reserves for operating costs, while putting plans into action for a more comprehensive budget development process to begin in the Fall. I am grateful to our community for your input on the City’s priorities, and look forward to hearing more feedback as we work together to maintain our City’s financial stability now and in the future.
As always, please take care of yourselves and each other.
Karen Pinkos
City Manager
City of El Cerrito
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10890 San Pablo Ave.
El Cerrito, CA 94530
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