Title
Adoption of Resolutions Approving and Adopting Midcycle Changes to the City of Alameda Budget for Fiscal Year 2026-27 (Excluding the Operating Budget Amendment for the Rent Program); [City Council AND SACIC] and
Adoption of Resolution Approving Workforce Changes and Amending the Management and Confidential Employees Association (MCEA) Salary Schedule and Amending the Alameda City Employees Association (ACEA) Salary Schedule in Fiscal Year 2026-27 Effective July 1, 2026. [City Council] (Finance 10024051)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
The Citywide budget outlines the City of Alameda’s (City) fiscal plan for the upcoming fiscal year, as well as the level and type of services to be provided. On June 17, 2025, City Council adopted the Biennial Budget for Fiscal Years (FY) 2025-27. After the first year of the budget cycle, staff brings updates for the second year to City Council for approval (Midcycle Update). As part of the Midcycle Update, City Council held a Budget Workshop on May 5, 2026, during which departmental requests and funding updates previously not included in the Biennial Budget were discussed and direction was given by City Council for inclusion in the FY 2026-27 Midcycle Update. These FY 2026-27 midcycle budget amendments are attached as Exhibit 1 and Exhibit 2, excluding the budget amendment for the Rent Program which is a separate agenda item. Staff recommends City Council adopt the attached resolution amending the FY 2026-27 Operating and Capital Budgets.
BACKGROUND
On May 5, 2026, City Council held a budget workshop regarding the City Manager’s proposed midcycle budget amendments for the FY 2026-27 Operating and Capital Budgets. The workshop was intended to give City Council and the community an opportunity to review the factors that make up the overall City budget. During the workshop, staff provided information and answered questions about departmental funding requests that varied from the previously approved baseline budget. City Council and the community provided input to staff on the allocation of funding beyond the baseline budget.
At the conclusion of the workshop, City Council directed staff to change five of the proposed midcycle amendments to the FY 2026-27 Operating and Capital Budgets but otherwise accept the remaining proposed midcycle amendments with no changes. The five midcycle amendments City Council directed changes were to convert the new full-time personnel requests from Finance, Fire, Human Resources (HR), Public Works and Recreation and Parks, to part-time positions. Four of these part-time conversions are included in this FY 2026-27 Midcycle Budget, and Public Works withdrew its personnel request as it is not feasible as a part time position. City Council directed staff to return as part of the FY 2026-27 MidYear Budget with any recommendations on these part-time positions and after a 5-year forecast is conducted in Fall 2026. Per City Council direction, no new hires, full-time or part-time, will occur until the new City Manager has had an opportunity to review these proposed personnel changes and agrees to them. The Workforce Changes section of this report details these changes in more depth between the Budget Workshop’s proposed budget and the FY 2026-27 Adopted Budget.
DISCUSSION
The Midcycle Budget intends to meet City Council’s Strategic Priorities for the upcoming fiscal year. At the May 5, 2026 City Council budget workshop, City Council indicated support for the proposed FY 2026-27 Midcycle budget adjustments as recommended by the Interim City Manager, and directed staff to convert five new full-time personnel requests to their part-time equivalents. These changes, without part-time Public Works Division Manager funding, resulted in a total FY 2026-27 General Fund Budget of $159.28 million and a total All Funds Budget of approximately $365.54 million. These proposed changes will reduce the General Fund’s projected residual balance at the end of FY 2026-27 from a forecasted $10.81 million to $9.7 million. The residual General Fund balance is in addition to the City’s policy mandating reserves of 25% - a projected $37.17 million at June 30, 2027.
The discussion below provides a brief overview of the proposed FY 2026-27 Midcycle budget amendments for the General Fund and workforce changes. More information about the General Fund, Citywide expenditures and revenue budget amendments are provided in Exhibit 1. Overall, the General Fund revenue forecast increased by 4.98% in FY 2026-27 from the June 2025 Biennial Budget forecast, while General Fund expenditures are expected to increase by 1.53% in FY 2026-27 above the Adjusted Budget.
In April 2026, The California Secretary of State determined Initiative 1983 (25-0006A1) is eligible for the November 2026 ballot. This measure would reduce the amount of transfer tax levied from the current $12.00 per $1,000.00 to $1.10 per $1,000.00, cutting City transfer tax revenues by 91%, roughly $10 million per year. This transfer tax revenue is used directly to pay for core services including infrastructure and safety services.
I. FY 2026-27 General Fund Revenues
Since adoption of the FY 2025-27 Biennial Budget in June 2025, economic headwinds have flattened several General Fund ongoing revenue categories, specifically sales and use taxes, and slowed the growth of others, namely property taxes. FY 2026-27 General Fund revenues, including transfers-in, are budgeted to increase by $8.07 million, from the previous projection of $150.49 million, to $158.56 million (Exhibit 1). Of this increase, $1.82 million is ongoing revenue and $6.26 million is considered one-time. Property tax is the City’s largest source of General Fund revenue and is experiencing a slow-down in growth when compared to growth rates from previous years. This is due to fewer property transfers in both residential and commercial real estate property markets, keeping properties at a relatively suppressed appraised value.
Expectations for General Fund revenues in FY 2026-27 are summarized below:
Property Tax is approximately 44.67% of General Fund revenues. Property tax is forecasted to increase by an estimated 3.11% from the FY 2025-26 projection of $66.78 million to $68.86 million in FY 2026-27.
Property Transfer Tax (PTT) is estimated at $11.5 million, the same amount as what’s in the Adopted Biennial Budget. Although actual PTT receipts have ranged from $15.2 to $21 million in previous fiscal years, the fluctuation in revenues was mainly due to the sale of large commercial properties. By its nature, revenues derived from PTT are volatile and cannot in totality be considered ongoing revenues, thus must be forecasted and budgeted prudently.
Sales Tax/Transaction and Use Tax revenues are dependent on consumer spending and on overall economic health. Sales tax is forecasted to remain relatively flat (no growth) through FY 2026-27. Part of this flat projection is due to the City losing one of its major generators at the end of FY 2024-25. In addition, the City will likely see decreased sales tax revenue over the next few years due to tariffs, inflation, and international events.
Transient Occupancy Tax (TOT) is projected to stay flat at $3.4 million in FY 2026-27.
Utility Users Tax (UUT) is generated on use of cable television, telephone services, natural gas, and electricity. UUT is expected to increase from $9.96 to $10.16 million in FY 2026-27.
Business License Tax is forecasted to increase $0.09 million to $3.15 million due to improved collection efforts.
Departmental Fees and Charges for Services are forecasted to increase $0.65 million in revenue collections from fee increases for allowable charges for ambulance transport services, recreation fees, increased safety inspections, and enhanced collection activity.
Current Fiscal Year 2026-27 Adjustments Requested
A6. Transfer In - Other Post-Employment Benefits (OPEB) Trust & Contributions ($4,409,702): Per the Pension Rate Stabilization Policy most recently approved by the City Council in October 2022, Staff is able to withdraw up to the annual required contribution (ARC) for OPEB costs from the PARS 115 OPEB Trust Fund (OPEB Trust). The City currently has a balance of $30.25 million in the OPEB Trust. Staff is recommending a transfer from the OPEB Trust to the General Fund to cover the City’s current ARC of $4,409,702. Of this amount, staff recommends withdrawing $3,809,702 from the OPEB Trust, and re-direct $600,000 of current year employee contributions, which had been going to the OPEB Trust, to instead go to covering current year ARC.
II. FY 2026-27 Citywide Expenditures and General Fund Expenditures
The City’s operating budget is comprised of a number of different funding sources. The General Fund is the largest single fund and represents the resources over which City Council has the most discretion.
The City’s total proposed expenditure budget for all funds, including transfers out, is approximately $365.54 million in FY 2026-27, exclusive of Alameda Municipal Power (AMP). The General Fund represents approximately $159.28 million or 44% of the total in the FY 2026-27 budget. Increases in personnel costs are due to pension cost increases, cost of living adjustments set to take effect in July 2026 depending on bargaining unit, and workforce changes. Expenditure changes approved by City Council at the Midcycle Budget workshop on May 5, 2026, can be found in Exhibit 1.
Since the Midcycle Budget workshop, staff learned that the Aquatics Center construction costs are increasing by another $5 million, due to the final construction costs received from the competitive formal bid process. Staff is bringing this item to City Council on June 16 with additional information, however, it is included in the recommended Midcycle budget to allocate within the entire budget context rather than separately with the construction contract award. Staff recommends that the General Fund residual fund balance be utilized to cover these increased costs. This expenditure is included in the anticipated ending fund balance of $9.7 million as of June 30, 2027.
III. Workforce Changes
As discussed at the May 5, 2026 City Council Budget Workshop, the FY 2026-27 Midcycle budget amendments for personnel changes were modified per City Council direction. City Council directed staff to utilize vacancy savings to hire four (4) more Police Officers and upgrade eight (8) positions per department requests. In terms of new full-time equivalent (FTE) personnel requests, City Council approved one Parking Technician for Public Works. City Council directed staff to convert the other five (5) proposed FTE new personnel requests to their part-time equivalents. Per City Council direction, no new hires, full-time or part-time, will occur until the new City Manager has had an opportunity to review these proposed personnel changes and agrees to them. These positions include the Finance Department Budget Analyst, Fire Department Office Assistant, Human Resources Safety Officer, Public Works Division Manager, and Recreation and Parks Park Maintenance Worker I. Public Works withdrew the Division Manager request since part-time was not feasible for that position, but all the other departments FTE requests were converted to part-time equivalents. Details on all personnel changes are shown in detail in Exhibit 2.
Table 1 details the City Council directed changes:
Table 1
|
Dept |
Request (FTE) |
Cost |
Part-Time Equivalent |
Cost |
Savings |
|
Finance |
One Administrative Management Analyst (Budget Analyst) |
$197,770 |
One Part-Time Administrative Specialist II |
$97,000 |
$100,770 |
|
Fire |
One Office Assistant |
$130,100 |
One Part-Time Administrative Assistant II |
$53,000 |
$77,100 |
|
HR |
One Safety Officer |
$197,770 |
One Part-Time Administrative Specialist II |
$97,000 |
$100,770 |
|
PW |
One Division Manager |
$251,800 |
None |
$0 |
$251,800 |
|
Rec & Park |
One Park Maintenance Worker I (6 months) |
$64,000 |
One Part-Time Maint. Specialist I (6 months) |
$33,500 |
$30,500 |
Table 2 shows the final FTE position allocation by department in the FY 2026-27 Midcycle Budget:
Table 2
|
Department |
FY 2024-25 Authorized |
FY 2025-26 Adopted |
FY 2026-27 Adopted |
FY 2026-27 Proposed |
Change |
|
City Attorney |
23.0 |
25.0 |
25.0 |
25.0 |
- |
|
City Clerk |
4.0 |
4.0 |
4.0 |
4.0 |
- |
|
City Manager |
10.0 |
11.0 |
11.0 |
11.0 |
- |
|
Base Reuse and Economic Development |
11.0 |
12.0 |
12.0 |
12.0 |
- |
|
Finance |
17.0 |
17.0 |
17.0 |
17.0 |
- |
|
Fire |
121.0 |
121.0 |
121.0 |
121.0 |
- |
|
Human Resources |
10.0 |
10.0 |
10.0 |
10.0 |
- |
|
Information Technology* |
10.0 |
12.0 |
12.0 |
12.0 |
- |
|
Library |
22.0 |
23.0 |
24.0 |
24.0 |
|
|
Planning, Building & Transportation |
34.0 |
33.0 |
33.0 |
33.0 |
- |
|
Police |
125.0 |
125.0 |
125.0 |
125.0 |
- |
|
Public Works |
86.0 |
86.0 |
86.0 |
87.0 |
+1.0 |
|
Recreation & Parks |
34.0 |
35.0 |
35.0 |
35.0 |
- |
|
Total |
507.0 |
514.0 |
515.0 |
516.0 |
+1.0 |
ALTERNATIVES
• Approve and adopt the budget and workforce changes as proposed in the staff report.
• Approve and adopt the proposed budget and workforce changes with any amendments made during tonight’s City Council meeting.
FINANCIAL IMPACT
Staff recommends adoption of these midcycle budget amendments to the FY 2026-27 Operating and Capital Budget, with the exclusion of the budget amendment for the Rent Program which is presented as a separate agenda item. With the proposed budget, it is projected that the City will maintain an available excess reserve fund balance in its General Fund of approximately $9.7 million at the end of FY 2026-27.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
Adopting these resolutions is in alignment with the City’s FY 2023-26 Strategic Plan under the priority to Practice Fiscally Responsible, Equitable and Inclusive Governance.
ENVIRONMENTAL REVIEW
These actions are not projects and are exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378(b)(4) of the CEQA guidelines, because they involve governmental fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
CLIMATE IMPACT
There are no climate impacts associated with this action. City Council may provide direction to staff on funding priorities for implementation of the Climate Action and Resiliency Plan as part of the budget workshops.
RECOMMENDATION
(1) Adopt Resolutions approving and adopting midcycle changes to the City of Alameda budget for fiscal year 2026-27 excluding the Operating Budget amendment for the Rent Program; and
(2) Adopt a Resolution approving workforce changes and amending the Management and Confidential Employees Association (MCEA) Salary Schedule and amending the Alameda City Employees Association (ACEA) salary schedule in fiscal year 2026-27 effective July 1, 2026.
Respectfully submitted,
Ross McCarthy, Finance Director
Prepared By,
Ecaterina Burton, Budget Manager
Exhibits:
1. Midcycle Budget Amendments
2. Midcycle Workforce Amendments
3. MCEA Salary Schedule as of July 2026
4. ACEA Salary Schedule as of July 2026