FY 2026-27 Proposed Midcycle Budget

governmental purposes. Expenditures can be divided by type (e.g., salaries, retirement contributions, debt service, supplies, capital projects, etc.), or by the department that spends them (e.g., Police, Fire, Library, Public Works, etc.).   To ensure that restricted revenues are used only for their intended purpose, the City accounts for its financial resources in different “funds.” For instance, federal grants from the U.S. Department of Transportation for road construction are held in a different fund than revenues from the City’s Public Safety & Services Measure.   In addition to the Adopted Policy Budget, the City also issues a Adopted Capital Improvement Program (CIP) for City Council consideration. The Policy Budget is the City’s operating budget and includes the projected revenues and expenditures required to provide most City services. For instance, the operating budget includes revenues from general taxes which provides funding for police services, fire and emergency medical services, youth and recreation programs, library services, city administration, and other City needs.   The CIP, by contrast, presents planned expenditures for projects which will improve the City’s infrastructure, buildings, and environment as well as major purchases such as land, buildings, and equipment. For example, the CIP includes water quality projects around Lake Merritt, complete repaving of streets and roads, construction of sewer infrastructure and construction or renovation of City buildings. THE MIDCYCLE BUDGET PROCESS Budget Amendment March-June 2026: Midcycle Budget Amendment   Toward the end of the first year of the two-year budget cycle, the Mayor and City Council conduct a mid-cycle budget review to address variances in estimated revenues and expenditures and other changes that may have impacted the City’s financial condition. For the FY 2025-27 budget cycle, the mid-cycle review will take place between March and June 2026 and will pertain to revenues and expenditures for the FY 2026-27 fiscal year (i.e. the second year of the biennial budget). Year-Round July 2026-June 2027: Budget Amendments   The City Council also has the authority to amend the budget throughout the two-year period. Any appropriation of new money or changes to the allocation of appropriations between funds or departments requires approval by the City Council. Transfers between divisions within a department, between spending accounts, or between projects may be made at the administrative level. These transfers may be authorized by the City Administrator, Finance Department, or department directors depending on the nature of the transfer. THE BIENNIAL BUDGET PROCESS The budget process is the procedure through which the City formally develops, deliberates, and adopts its budget. The budget process consists of several important stages:   The City’s Consolidated Fiscal Policy, Ordinance 13487 C.M.S., provides the legal framework that guides the budget process and mandates that the City pass and adopt a balanced budget. Budget Development November-December: Baseline Budget Development   In the fall, the Finance Department develops a “baseline budget” which is a preliminary two-year budget that forecast revenues and expenditures based on the City's current level of staffing, program funding and policies. The baseline budget is the foundation upon which the proposed budget is developed. The Finance Department worked in conjunction with all City departments to create the baseline budget considering the latest economic projections and information on likely expenditure increases such as fringe benefit rates for retirement and health care. This forecast of expected revenue and expenditures in the baseline budget helps the City identify whether there will be an operating surplus or the need to address a funding shortfall.   March: Five-Year Financial Forecast Report   January-March: Internal Analysis Budget Development, 1. Budget Adoption, and 2. Budget Amendment. 3. 21