title
PUBLIC HEARING TO ADOPT THE FISCAL YEAR 2026-27 ANNUAL BUDGET; APPROVE THE 2026-31 CAPITAL IMPROVEMENT PLAN; APPROVE THE FY 2026-27 FEE SCHEDULE; APPROVE THE FY 2026-27 CALIFORNIA CONSTITUTIONAL APPROPRIATIONS LIMIT; ADOPT THE FY 2026-27 ANNUAL BUDGET FOR THE PARKING AUTHORITY OF THE CITY OF STOCKTON; ADOPT THE FY 2026-27 ANNUAL BUDGET FOR THE SUCCESSOR AGENCY TO THE FORMER STOCKTON REDEVELOPMENT AGENCY
recommended action
RECOMMENDATION
It is recommended that the City Council approve a resolution to:
1. Adopt the Fiscal Year (FY) 2026-27 Annual Budget, the 2026-31 Capital Improvement Plan, and the FY 2026-27 Fee Schedule,
2. Adopt the FY 2026-27 California Constitutional (Gann) Appropriations Limit,
3. Approve other administrative and financial actions.
And it is recommended that the Parking Authority of the City of Stockton (Parking Authority) approve a resolution to:
1. Adopt the FY 2026-27 Annual Budget for the Parking Authority (Exhibit 1 to the Parking Authority resolution).
And it is recommended that the Successor Agency to the former Stockton Redevelopment Agency (Successor Agency) approve a resolution to:
1. Adopt the FY 2026-27 Annual Budget for the Successor Agency to the former Stockton Redevelopment Agency (Exhibit 1 to the Successor Agency resolution).
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the resolutions.
body
Summary
The City Manager submitted the Proposed Annual Budget, Capital Improvement Plan, and Fee Schedule to the City Council on May 15, 2026. These documents, available on the City’s website, include a detailed annual financial plan for all City funds, with the key elements summarized below. The City Council held a public budget study session on June 2, 2026, to review the budget in detail and receive public comment for consideration. Changes requested by Council are now reflected in the staff report and resolution.
The FY 2026-27 annual budgets for the City of Stockton Parking Authority and the Successor Agency for the former Stockton Redevelopment Agency are also provided for approval and adoption.
The proposed financial plans address Council priorities and maintain the Council’s commitment to fiscal sustainability. Expenditures in the Proposed Budget total $1.05 billion for the operations, capital, debt, and transfers for all funds and programs of the City. This amount represents an increase of $67.7 million, or 6.9%, over the FY 2025-26 Annual Budget. The increase in the city budget is attributable to several factors, including costs associated with side letter agreements with the Police and Fire Departments, as well as expenses outside our control related to health care, pensions, and general liability. We are also facing increased operating and maintenance costs due to rising inflation.
Citywide estimated revenues are $973.5 million in the FY 2026-27 Proposed Budget for all City programs excluding transfers between City funds. This projection is roughly $37 million more than the $936.1 million projected in the FY 2025-26 Annual Budget. The FY 2026-27 Annual Budget also supports 1,806 full-time positions, up from 1,785 in FY 2025-26.
Staff recommends that Council conduct a public hearing to receive input regarding the proposed budgets and, after the hearing, approve resolutions to enact the FY 2026-27 budgets for the City, the Parking Authority, and the Successor Agency to the former Stockton Redevelopment Agency.
DISCUSSION
Background
In April 2026, the City Council held its annual goal-setting session to establish priorities for the upcoming year. This workshop culminated in the selection of three top priorities: Public Safety, Economic Development, and Infrastructure Investment. These priorities helped shape the FY 2026-27 budget development process and update long-range expenditure planning within the City’s Long-Range Financial Plan. The City Manager released the FY 2026-27 Proposed Annual Budget, along with the 2025-2030 Proposed Capital Improvement Plan and the FY 2026-27 Proposed Fee Schedule to Council on May 15, 2025. The City held a public study session on June 2, 2026, to review the budget in detail and to receive public comment. Additionally, two of the City’s citizen advisory committees had the opportunity to examine the proposed budget in relation to two of the City’s three tax measures (Measures M and W). The meeting scheduled for June 1, 2026, for Measure A was cancelled. The budget for this measure will need to be presented at their next scheduled meeting.
Present Situation
The proposed budget is balanced and remains consistent with the Council’s commitment to long-term solvency. The revenue estimates and expenditure appropriations in the budget reflect all available City funds. They include operations, capital, debt, and internal transfers for all programs and support functions for the City. Fund summaries and financial schedules in the budget document show prior-year actuals, FY 2025-26 projections, and the proposed FY 2026-27 budget for each of the City’s budgetary units.
At the public study session on June 2, 2026, the Council was presented with a balanced budget based on current projections; however, as we are currently in negotiations, the proposed FY 2026-27 budget does not reflect the impact of any ongoing contractual agreements. The adopted budget and the City’s Long Range Financial Plan will need to be adjusted to reflect these expenditures, as well as their impact on future expenditures.
There was one change requested by the City Council during the study session. On June 2, 2026, the City Council requested the addition of an agenda coordinator position in the FY 2026-27 Budget to assist with duties related to the administration and coordination of City Council Meetings. The total cost of the requested position is $253,034 with salaries and benefits. To accommodate this request the City Manager has identified $75,000 in funding from City Wide Marketing with the rest of the costs to be allocated to other City funds. These changes will be reflected in the FY 2026-27 Adopted budget book.
FY 2026-27 Annual Budget
Citywide Budget
Citywide revenues for FY 2026-27 are estimated at $973.5 million across all programs and services, an increase of almost $37 million from the prior year. Totals include external revenue of $718 million, transfers of $35.5 million, and benefit and equipment internal service fund charges of $260.8 million. These revenues will support projected total expenditures in all funds of $1.05 billion.
The table below summarizes the proposed FY 2026-27 revenue budgets by department:
The proposed expenditure budget totals $1.05 billion for all programs, funds, and departments of the City, an increase of $67.7 million, or 6.8%, from the FY 2025-26 adopted budget.
The table below summarizes the proposed FY 2026-27 Annual Budget by department:
The proposed FY 2026-27 Annual Budget funds 1,806 full-time positions. Mid-year and new positions approved include:
• Nurse
• Emergency Communications Manager
• Public Safety Information Systems Analyst
• Crime Analyst
• Library Manager
• Marketing and Social Media Analyst
• Library Assistant II
• Bookmobile Driver (NEW)
• 5 Fire Telecommunicators
• 3 Firefighters (NEW)
• Deputy Fire Marshal (NEW)
• Program Manager I (NEW)
General Fund Operating Budget
The total General Fund expenditure budget for FY 2026-27 is $344.5 million, an increase of $16.2 million from the FY 2025-26 Adopted Budget. Approximately $14.2 million in newly approved expenditures is included in the General Fund budget to support public safety, aligning with one of the council's top priorities. The proposed revenues of $344.5 million are also $16.2 million higher than the $328.3 million projected for FY 2025-26.
The table below summarizes the proposed FY 2026-27 Annual Budget:
Proposed FY 2026-27 General Fund expenditures are $344.5 million. Operating expenses across the General Fund increased due to approved labor agreements, retirement rates, health insurance, general liability charges, utility rates, and maintenance costs. Employee Services expenses alone increased over the prior year by 6.7%, while overall expenses only increased by 2.6%. Employee benefits are up primarily due to increases in general liability, health, safety, and retirement rates.
While the General Fund is projected to end FY 2025-26 with a negative fund balance of $3.8 million, the City has reserves to cover the potential shortfall. This estimate is predicated on the full expenditure of FY 2025-26 budgeted allocations. As we begin to close out the fiscal year, savings from unexpended encumbrances and contracts will affect this balance, and we will adjust the projection accordingly.
General Fund Reserves
Per the General Fund - Reserve and Fund Balance Policy, updates to the General Fund reserve targets are proposed as follows:
|
Category |
Amount (millions) |
|
Working Capital |
51.9 |
|
Known Contingencies |
68.4 |
|
Risk-Based |
10.8 |
|
Total |
$131.2 |
The Working Capital reserve is equivalent to two months of annual operating expenses. The Known Contingency reserve target is estimated at $68.4 million, down from the prior year's $73.5 million. The target for the Priority II Risk-Based Reserve in the Fiscal Sustainability Fund is projected at $10.8 million, which is the same as the estimate for FY 2025-26. These changes are based on updates to infrastructure, liability, and revenue amounts.
At the end of FY 2025-26, any General Fund available balance will be assigned to the Working Capital reserve consistent with the reserve policy. Any amount assigned to the Known Contingency reserve will help fund future pension costs, public safety facility needs, retention and recruitment efforts, and the replacement of any of the City’s operating and infrastructure systems. The current General Fund balance is sufficient to fund the Working Capital and the Known Contingency reserves. Under the Council reserve policy, any balance above what is required for these amounts is to be split between Council Priority projects and Risk-Based Reserves.
Citizens’ Advisory Committees
The FY 2026-27 Proposed Annual Budget was presented to the Measure W Oversight Committee on May 28th and to the Measure M (Strong Communities) Advisory Committee on June 4th. The financials related to the oversight for each group were also discussed, with any follow-up to be provided at their next scheduled meetings.
The Measure A Citizens Advisory Committee Meeting, which was scheduled for June 1, 2026, was canceled, so the financials for the upcoming budget year have not been presented to this group. This will need to occur at their next regularly scheduled meeting.
2026-2031 Capital Improvement Plan (CIP)
The CIP is a five-year plan that lists the City’s facility and infrastructure needs. For FY 2026-27, the annual appropriation for the CIP is approximately $85.4 million. Below is a list of some FY 2026-27 capital projects proposed consistent with the council’s strategic priorities:
Citywide Roof Replacement and Construction • Citywide HVAC Unit Repair & Replacement • Community Center Lighting Control Upgrades • SEB 911 Communications Center HVAC Upgrade • Oak Park Senior Center RR/ADA Upgrade • Neighborhood Traffic Management Program • Mormon Slough Improvements • Delta Water Treatment Plant (DWTP) Campus Improvements • DWTP Groundwater Recharge Basins • Advanced Metering Infrastructure • Well and Reservoir Improvements • Pump Station Rehabilitation and Improvements • Water Service Line Replacements • City Street Restriping • Sidewalk, Curb, and Gutter Repairs • Local Street Resurfacing
The proposed five-year Capital Improvement Plan covers fiscal years 2026-2031 and totals $1.58 billion. More than half of the CIP is related to Transportation projects ($948.02 million), with Municipal Utility projects ($213.9 million), and other Citywide projects ($416.9 million) comprising the remainder.
FY 2026-27 Fee Schedule
The FY 2026-27 Fee Schedule reflects new and proposed changes to existing fees across several City departments, including a 3.0% inflationary adjustment to all fees, intended to address rising service costs. Section 1 of the Proposed FY 2026-27 Fee Schedule lists the proposed new and changed fees, along with reasons for each change. Proposed new fees are presented for the City Clerk’s Office, Economic Development, Police, and Recreation & Leisure. Proposed fee changes include Community Services, Economic Development, Municipal Utilities, Police, and Recreation & Leisure. Wastewater rates are set to increase 4% based on the rate study completed in FY 2024-25. Two City departments are proposing to inactivate ten existing fees. Fee changes are summarized in the Proposed Fee Schedule, pages I-3 to I-17.
Parking Authority of the City of Stockton
The Parking Authority of the City of Stockton is a public body established by the City Council in Resolution 2013-12-17-1209, pursuant to the Streets and Highways Code, to oversee the parking garages, lots, on-street spaces, and enforcement activities within the boundaries of the City of Stockton CFD 2001-1 Downtown Parking District.
Revenues derived from parking fees within the district and from enforcement of parking violations are pledged to first pay the 2020 Parking Bond debt service, then to operations, maintenance, and any other obligations of the Authority. Taxes assessed on property owners and businesses in the downtown parking district are recorded in this fund and used for parking management and operations of parking facilities and programs within the district.
In February 2020, the Parking Authority refinanced existing parking bonds to save money and to procure $3 million for capital needs. The bonds have funded much-needed elevator upgrades and the replacement of the revenue control system, including ingress and egress equipment at parking garages and lots. These capital upgrades enhanced safety, reliability, and efficiency across the facilities and enabled staff to provide better service to parking customers.
Parking operations are emerging from the impacts of the COVID-19 pandemic, with overall revenues expected to surpass pre-COVID levels in FY 2022-23. Despite the overall improvement in performance, enforcement revenues remain the slowest to recover, as citations have not returned to their previous payment rates. The Parking Fund received $770,000 from ARPA Funds to offset some of the losses from previous years. Operations and monthly proceeds will be monitored closely as parking revenues continue to stabilize and expenses are managed with rising labor and service/maintenance costs.
Successor Agency to the former Stockton Redevelopment Agency
The Successor Agency depends on the receipt of property tax increment revenues to pay obligations of the former Stockton Redevelopment Agency. After approval by the Oversight Board, tax increment funds are distributed to the Successor Agency by the San Joaquin County Auditor-Controller’s Office. The use of tax increment is restricted, and the Successor Agency does not receive excess tax increment. Excess tax increment, after payment of debt and administrative costs, is distributed to other taxing entities, such as the City, San Joaquin County, the State of California (for schools), and special districts.
Successor Agency revenue of $7.3 million is projected to fund the bond debt payment for FY 2026-27. Any Ending Available Balance in the Successor Agency will be retained by the San Joaquin County Auditor-Controller for distribution to other taxing entities, including the City of Stockton.
Other Budget Actions
FY 2026-27 Gann Appropriation Limit
The California Constitution limits growth in local government spending and sets a maximum on expenditures from general taxes. The law, commonly known as the Gann Limit, requires that the limit is recalculated and approved annually by the City Council at the beginning of each fiscal year. The Gann Limit is indexed to specified growth factors approved by the Legislature and applied to revenue appropriations.
The City’s FY 2026-27 Gann Limit has been calculated at $536,588,822, which exceeds the proposed appropriations subject to the limit of $290,358,044. The City’s appropriations remain well within the Constitutional appropriations limit.
FINANCIAL SUMMARY
The proposed FY 2026-27 Annual Budget appropriates $1,049,877,358 in all City funds, $8,142,508 for the Parking Authority, and $7,386,800 for the Successor Agency.
The complete documents of the City’s Proposed FY 2026-27 Annual Budget, the Proposed 2025-2030 Capital Improvement Plan, and the Proposed FY 2026-27 Fee Schedule are available for review on the City’s website <https://www.stocktonca.gov/government/budget___financial_reports/index.php> or in the City Clerk’s Office.