Monterey Council to continue budget deficit talks
The Monterey City Council will meet Tuesday to continue discussing how to address the city’s $10 million budget deficit for fiscal year 2026-2027.
In a special meeting last week, the council held a joint session with Neighborhood and Community Improvement Program, voting to have the committee come up with a list of projects that could total $3-4 million that could potentially be frozen.
Council members have been working on an exercise with city staff determining how the city can come up with $10 million in other ways, including tax measures and reassessing vacant city positions.
The council agreed that if they could come up with solutions totaling more than the target of about $6 million, then they wouldn’t need to take from the Community Improvement Program.
The latest staff report recommends using up to $4 million in Community Improvement Program funds, including the possibility of skipping next year’s Program allocation, to help balance the budget without cutting services or staff.
City staff explained that using next year’s Program funds could immediately balance the budget while allowing time for ongoing revenue solutions to take effect.
“This ‘skip next year’ option would allow scarce staff resources to catch up on project delivery,” Tuesday’s agenda reads. “It is the clearest way to an assured solution to balance FY 2026-27 using existing sources.”
Council members have already expressed interest in several new revenue measures, including a 0.375 percent sales tax increase projected to raise $4.5 million annually, as well as potential taxes on vacant properties, parking lots and admissions. Staff also noted long-term options such as property sales, partnerships and stormwater fees to strengthen the city’s fiscal outlook.
The agenda reiterates that reserves should remain untouched, citing the need to protect the city’s bond rating and maintain a 20 percent reserve level for emergencies. Council members asked several questions about the possibility of using reserves and both council members Jean Rasch and Ed Smith said they would give a “yes” vote to use reserves if the opportunity arises.
The council will also review potential service reductions through attrition, pausing city programs such as rental assistance or event grants, and savings through contract changes. Even with all those measures, the city could still face a $2.4 million shortfall next year.
City staff said they expect to begin public opinion polling this fall to test support for new tax measures on the June 2026 ballot.
The council will meet at 6 p.m. Tuesday at Monterey City Hall, 580 Pacific St. The meeting will be streamed via Zoom at https://monterey-org.zoomgov.com/j/1609222935.
