Budget Analysis · FY 2026-27 Proposed
What's actually in the budget.
The City Manager presented the FY 2026-27 proposed budget to Council on May 19, 2026. It's the first budget in at least five years where spending exceeds revenue — and the General Fund balance draws down to zero. The public hearing is June 2, 2026. Here's what's in it.
GF Revenue
$130M
total including transfers
GF Spending
$131M
with UAL + vacancy offset
Ending Balance
$0
drawn to zero
Total CIP
$199M
89 projects
The big picture
Spending exceeds revenue for the first time.
For the past five years, Redondo Beach has reliably collected more in General Fund revenue than it spent. That streak ends with this proposal. The City is projecting $130M in revenue against $131M in total spending — a structural operating deficitThe gap between recurring revenue and recurring costs, before one-time adjustments. A negative number means the City is spending more than it takes in on an ongoing basis. of $830K.
The budget starts with just $1,385,358 in beginning fund balance — a razor-thin cushion — and ends the year at exactly $0.
How does it balance? Two things. First, the City projects $2.9M in vacancy savings — a credit for positions that are budgeted but expected to sit empty part of the year. Second, those savings are almost entirely consumed by a $3.5M UALUnfunded Accrued Liability — the gap between what CalPERS owes future retirees and what it currently has invested. This 'extra' payment above normal pension contributions chips away at that gap. pension payment.
Put simply: vacancy savings is the plug that makes this budget work. If the City fills more positions than expected, the math breaks.
Six-year trend
The lines cross.
Revenue (dashed) and spending (solid) have tracked each other for years — but the proposed FY27 budget is the first where the expense line rises above the revenue line. The “P” marks the proposal.
Over the five-year window, General Fund spending grew 52% and revenue grew 23%. Note the Y axis starts at $70M, not zero — both series live in a narrow band and a zero-based axis would flatten the slope.
Where the money comes from
$130M in General Fund revenue.
Property tax (including the VLF replacement) accounts for 61% of all tax revenue. Total revenues are nominally up from last year's adopted budget, but down 3%compared to the FY 2025-26 midyear estimate — mostly because a $7.4M one-time transfer-in isn't repeated.
- Property TaxThe City's share of the ~1% county property-tax bill. Does not include the VLF replacement — that's broken out separately this year.$39.8M · 31.4%
- Property Tax in Lieu of VLFVehicle License Fee replacement the State began sending cities in 2004. Previously lumped with Property Tax; now shown separately.$11.0M · 8.7%
- Sales & Use TaxThe City's slice of every taxable purchase in Redondo Beach — about 1¢ of the 10.25% combined rate. Includes restaurants, retail, and online purchases delivered locally.$11.2M · 8.8%
- Utility Users TaxA 4.75% tax on your electricity, gas, telephone, cable, and water bills. Up 5% — usage and rate increases driving the gain.$9.5M · 7.5%
- Transient Occupancy TaxThe hotel tax — 12% of every room bill in town. Down 4% year-over-year, reflecting softening occupancy rates along the waterfront.$8.2M · 6.5%
- Other TaxesBusiness license tax, franchise fees, property transfer tax, and smaller tax categories combined.$4.1M · 3.2%
- Non-Tax RevenueCharges for services, licenses & permits, fines, use of money & property, intergovernmental transfers, and miscellaneous. The City's second-largest revenue bucket.$42.4M · 33.4%
- Transfers InMoney moved into the General Fund from other City funds. Down 91% — last year's large one-time transfer isn't repeated.$681K · 0.5%
What changed
Year-over-year moves.
Compared to the FY 2025-26 midyear figures. Revenues and expenditures are both down — but revenues fell further.
Where the money goes
$131M in General Fund spending.
Personnel is 53% of the total. Internal services (departments billing each other) is the second largest category. The one line to watch: Vacancy Savings ($2.9M) — the negative line that makes the budget balance.
- PersonnelSalaries, benefits, overtime, and retirement contributions for all General Fund employees. The single largest line item — 53% of the operating budget.$69.8M · 51.0%
- Internal ServicesCharges from City departments to each other — IT, fleet maintenance, building maintenance, insurance premiums. Essentially flat year-over-year.$35.1M · 25.6%
- Maintenance & OperationsSupplies, contracts, utilities, equipment rentals, and professional services. Cut 13% from midyear — the biggest discretionary reduction in the budget.$12.9M · 9.5%
- Transfers OutMoney moved from the General Fund to other City funds — CIP, debt service, enterprise funds. Down 29% as one-time CIP transfers wind down.$12.5M · 9.2%
- UAL PaymentAdditional payment toward the City's unfunded pension liability with CalPERS, beyond what's included in Personnel costs. Down 3%.$3.5M · 2.6%
- Vacancy SavingsCredit for positions that are budgeted but expected to remain vacant part of the year. This is the plug that makes the budget balance — without it, the City would end the year in deficit.$2.9M · 2.1%
- Capital OutlayEquipment purchases charged directly to the General Fund (not CIP). Cut 80% — nearly all capital spending pushed to the CIP program.$40K · 0.0%
New spending requests
32 decision packages.
Decision packagesA 'decision package' is a discrete spending or savings proposal that Council can approve or reject individually — it's how the City itemizes changes from the status quo budget. are line-item changes that go beyond the status quo budget. 21 of the 32 directly hit the General Fund, totaling $4.7M in net new General Fund spending.
CS/WED Director Merge
Combining the Community Services and Waterfront & Economic Development director roles into one position. Organizational efficiency play.
Community Services Analyst
New analyst position in Community Services — likely to handle growing programming and grant management workload.
Special Event Fees
Updating fee schedules for events at City facilities. Revenue modernization — the 'Immediate Impact' theme in action.
Police Technology & Training
Ongoing investment in law enforcement technology (cameras, license plate readers, dispatch systems) and continuing education.
Crossing Guards
Funding for school crossing guard services — a recurring ask from parents that previously appeared as a one-time item.
The full list of all 32 packages will be available in the budget book ahead of the June 2 hearing.
Capital projects
$199M in the CIP pipeline.
The Capital Improvement ProgramCapital Improvement Program — major infrastructure projects like road repairs, building renovations, and utility upgrades. Funded separately from the operating budget. includes $130M in new spending and $69.1M carried forward from the prior year — 89 projects in total. For context, the City spent just $16.5M and completed 28 projects in FY 2025-26.
33
Street
20
Public Facility
11
Park
9
General Improvement
7
Waterfront
6
Drainage
3
Sewer
The gap between the $199M pipeline and the $16.5M actually spent last year raises an obvious question: how much of this gets built? The June 9 public hearing focuses specifically on the CIP.
What the City says this budget is about
Two themes.
Immediate Impact
- → Revenue and fee schedule updates
- → Near-term cost management
- → Limited priority program changes
Looking Forward
- → Revenue modernization strategy
- → Longer-term cost management
- → Insurance and CalPERS exposure
The “revenue modernization” language is new. Translated: the City is signaling that fee schedules and revenue sources will need updating — not just in this budget, but as a structural project over the next few years. CalPERS and insurance costs get their own mention as “longer-term” challenges.
What happens next
The adoption calendar.
The budget goes through five more stops before adoption. The operating budget hearing on June 2 and the CIP hearing on June 9 are both open to public comment.
- ✓
May 19, 2026
Council received and filed proposed budget
- ✓
May 21, 2026
Planning Commission CIP review (General Plan conformity)
- ○
May 26, 2026
Budget & Finance Commission — Special Meeting, 6:30 PM
- ○
June 2, 2026
Public Hearing — Operating Budget focus
- ○
June 9, 2026
Public Hearing — CIP Budget focus
- ○
June 11, 2026
Budget & Finance Commission regular meeting
- ○
June 16, 2026
Budget Adoption + User Fee Adoption + GANN Resolution
What to ask at the hearing
Five questions this budget raises.
What happens if vacancy savings don't materialize?
The budget depends on $2.9M in savings from unfilled positions. If the City hires faster than expected — or if the labor market tightens — that cushion disappears, and the fund balance goes negative.
Is a $0 ending balance sustainable?
Most financial advisors recommend cities maintain 15-20% of operating expenditures in reserves. An ending balance of $0 means zero margin for emergencies, legal settlements, or revenue shortfalls.
Why are transfers in down 91%?
Last year included a large one-time transfer into the General Fund. That's not repeated — which means the General Fund is standing on its own operating revenue this year, without the subsidy.
Can the City actually build $199M in capital projects?
The CIP pipeline is $199.4M, but the City spent just $16.5M on CIP last year. Either the pace of construction is about to accelerate dramatically, or this is an aspirational number that will carry forward again.
What does 'revenue modernization' actually mean?
The City flagged this as a forward-looking theme. It could mean updated fee schedules, new revenue sources, or reconsidering tax structures. The specifics aren't in this budget — but the language is a signal.
Sources & methodology
Where this data comes from.
All figures are from the City Manager's Proposed Budget presentation to City Council on May 19, 2026 (Legistar File #26-0581), prepared by Finance Director Stephanie Meyer. Year-over-year comparisons use the FY 2025-26 midyear estimates as the baseline — not the originally adopted FY 2025-26 numbers.
Historical data (FY22-FY26) is carried forward from our existing budget dashboard, sourced from the FY 2025-26 budget book. FY22-FY24 revenue figures are approximations.
The full proposed budget book, five-year CIP document, and supplemental materials are available through Legistar (File #26-0581).