The Sacramento City Council has started a series of early budget work sessions to address a projected $66.2 million deficit for the 2026-27 fiscal year. The discussions, which began on March 3, are expected to continue throughout March and will focus on finding ways to balance the city’s budget.
“These are not easy conversations,” said City Manager Maraskeshia Smith. “The options in front of the council carry real impacts to services and to our employees. We must be transparent about the challenge and align our spending with ongoing revenues.”
City officials explained that the shortfall is due to ongoing expenses rising faster than revenues, rather than an economic downturn. They cited factors such as increased costs, higher investments in priorities like homelessness services, and voter-approved reallocations of General Fund resources that have outpaced revenue growth.
During the initial meeting, staff outlined several possible scenarios for balancing the budget. A range of strategies was presented, including both expenditure reductions and potential new sources of revenue. These options were designed to give the council flexibility as it considers how best to address the deficit.
Finance Director Pete Colletto emphasized that multiple approaches would be needed: “Closing the gap will require a combination of strategies, not just cuts.” He said that possibilities under review include reducing expenses, adjusting fees, and exploring other revenue increases—some of which would need further public input.
Mayor Kevin McCarty commented on the process: “It’s early in the budget process. Right now, we’re evaluating all our options. We’re looking to conclude our budget with the fewest detrimental impacts on the city. More importantly, we are zeroing in on economic development to find ways to grow our budget so we can avoid making cuts in the future.”
Throughout March, city departments will present their proposed strategies during these work sessions. Departments have been asked to model reductions equal to 15 percent of their net General Fund use and describe how these cuts could affect service levels. No final decisions have been made yet; these presentations aim to inform future deliberations.
The next steps include continuing work sessions through March and releasing a balanced proposed budget by late April. Formal council discussions will take place in May before final adoption scheduled for early June.
Residents are encouraged by city officials to participate by attending meetings or submitting feedback online or directly contacting their representatives.
