Pacific Grove council receives midyear budget update; introduces ordinance to amend FY25‑26 budget
March 05, 2026 | Pacific Grove City, Monterey County, California
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Pacific Grove city staff presented a midyear financial update March 4 and the council introduced an ordinance to amend the fiscal year 2025‑26 operating and capital budgets.
Assistant Director Jessica summarized the city’s revised projections: the original FY25‑26 budget projected about $32.7 million in revenues and $33.8 million in expenditures, producing an operating deficit near $1.9 million. Staff recommended recognizing approximately $700,000 in additional revenues — roughly $200,000 from higher property‑tax projections and about $500,000 from increased transient occupancy tax (TOT), including new revenue projections tied to the Kimpton Hotel — and about $294,000 in additional general‑fund expenditures. With those adjustments, staff now projects an operating deficit of about $1.5 million.
Jessica noted several drivers of the changes: a Monterey Fire contract true‑up and added paramedic services, an elevator repair estimate of about $115,000 for the youth center, and adjustments to enterprise fund timing (notably sewer‑related projects). The report also identified $1.7 million in non‑general‑fund adjustments funded from existing balances, and a previously approved sewer fund project timing change of roughly $1.3 million that shifts spending across fiscal years.
Mayor Pro Tem made a motion to introduce and hold first reading of an ordinance to amend operating and capital budgets and position allocations for FY25‑26; the motion passed on a voice vote with no recorded opposition.
Councilmembers praised staff for conservative revenue assumptions and careful spending recommendations. The council discussed multi‑year implications, noting the city remains on track to meet a 25% reserve goal in the near term but that longer‑term pressures (capital needs such as Lovers Point breakwater and Chautauqua Hall) require continued fiscal vigilance.
What’s next: staff will return with ordinance text and any needed implementing items. Several council members requested continued attention to five‑year forecasts and capital planning so the city can address infrastructure needs without eroding reserves.
Quote: “We estimated revenues low and expenses high, and we’ve landed in a better position than projected,” Assistant Director Jessica said.
Assistant Director Jessica summarized the city’s revised projections: the original FY25‑26 budget projected about $32.7 million in revenues and $33.8 million in expenditures, producing an operating deficit near $1.9 million. Staff recommended recognizing approximately $700,000 in additional revenues — roughly $200,000 from higher property‑tax projections and about $500,000 from increased transient occupancy tax (TOT), including new revenue projections tied to the Kimpton Hotel — and about $294,000 in additional general‑fund expenditures. With those adjustments, staff now projects an operating deficit of about $1.5 million.
Jessica noted several drivers of the changes: a Monterey Fire contract true‑up and added paramedic services, an elevator repair estimate of about $115,000 for the youth center, and adjustments to enterprise fund timing (notably sewer‑related projects). The report also identified $1.7 million in non‑general‑fund adjustments funded from existing balances, and a previously approved sewer fund project timing change of roughly $1.3 million that shifts spending across fiscal years.
Mayor Pro Tem made a motion to introduce and hold first reading of an ordinance to amend operating and capital budgets and position allocations for FY25‑26; the motion passed on a voice vote with no recorded opposition.
Councilmembers praised staff for conservative revenue assumptions and careful spending recommendations. The council discussed multi‑year implications, noting the city remains on track to meet a 25% reserve goal in the near term but that longer‑term pressures (capital needs such as Lovers Point breakwater and Chautauqua Hall) require continued fiscal vigilance.
What’s next: staff will return with ordinance text and any needed implementing items. Several council members requested continued attention to five‑year forecasts and capital planning so the city can address infrastructure needs without eroding reserves.
Quote: “We estimated revenues low and expenses high, and we’ve landed in a better position than projected,” Assistant Director Jessica said.
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