City of Sacramento grapples with projected $58.6 million budget deficit. Here’s how the public can give input

The Sacramento City Council on Tuesday formally began discussing the budget for the upcoming fiscal year, focusing on a projected $66 million deficit. 

By approving carrying over extra funds from the previous fiscal year, the council reduced the estimated gap to $58.6 million, but officials said they will also need to make cuts to balance the budget. 

“We’re going to have to make hard decisions, no question about it,” Mayor Darrell Steinberg said. “But there are a number of important, creative ways that we can knock this $58 million number down even farther.” 

Assistant City Manager Leyne Milstein said Sacramento has three goals for its strategy to close the deficit: to not lose city employees, to reduce city services and to increase revenues while decreasing expenses. The city has a projected structural budget deficit because costs are rising faster than the amount of money the city is making or receiving. Other reasons for the shortfall include inflation and increased labor, pension and insurance costs, according to staff reports. 

Revenues have not grown at the rate the city expected when the council approved the current budget last June, Milstein said during the budget and audit committee meeting on Tuesday. During last year’s budget discussions, finance staff warned that the city could see a deficit of roughly $24.5 million for the 2024-25 fiscal year if it continues current homeless services and doesn’t receive state funding.  

The current estimated deficit of $58.6 million isn’t because of a recession, Finance Director Pete Coletto said on Tuesday. The city isn’t expecting a downturn, but he said that if one happens, the financial outlook would worsen. 

“Our forecast is assuming continued economic growth,” Coletto said. “Our forecast is not assuming a recession where we would see our revenues fall, but a recession remains a real risk.” 

The council plans to approve the budget in June and will hold public hearings over the next few months. The city has scheduled three community meetings and opened an online survey to collect feedback from the public. The deadline to complete the survey is March 24. 

Public meetings are scheduled as follows: 

• Wednesday, March 6 from 6 to 7 p.m.
  • North Natomas Community Center (2631 New Market Drive)
• Wednesday, March 13 from 6 to 7 p.m.
  • Pannell Meadowview Community Center (2450 Meadowview Road)
• Thursday, March 14 from 6 to 7 p.m.
  • Clunie Community Center (601 Alhambra Blvd.)

The city also plans to give the budget and audit committee a financial update in March, budget manager Mirthala Santizo said.