Council reviews midcycle budget, Measure P options and warns of service cuts to some landscaping districts

City finance staff presented a midcycle update that showed citywide revenues of approximately $376 million and expenses around $406 million, leaving a structural gap of roughly $12 million and a multi‑year fiscal forecast that would exhaust reserves without new revenue or deeper cuts.

Director of Finance John Ferado and staff described major cost drivers — PERS and benefit increases, higher liability and workers’ compensation costs and capital needs — and reviewed potential options. Staff asked council whether it wants to return July 7 with a formal resolution and ordinance to place a Measure P update (an additional 1% local sales tax and removal of the sunset) on the November 3 ballot. Staff estimated a 1% increase could generate roughly $24 million annually.

Why it matters: The council must weigh whether to place the tax question before voters as a measure to avoid deeper service reductions; staff stressed transparency, independent oversight for Measure P funds and survey results showing public prioritization of public safety, streets and homelessness response.

Key budget points: Staff said 50% of the general fund is from economically sensitive sources; public safety accounts for about 61% of general fund spending. The long‑term forecast shows persistent gaps without additional revenues or structural reforms. Capital highlights included North Texas recreation facility, corp yard electrification and two fire‑station projects.

LLMD/Service impacts: Public Works staff presented the FY2026–27 LLMD (landscape & lighting) budgets and said a court‑driven reduction in assessments for some districts has already required lowering services to 1996 levels in eight districts. In addition, corrected water‑meter billing will raise costs in Smith Ranch, Southbrook and Paradise Valley LLMDs (estimates of $80k–$110k increases). Rolling Hills and Green Valley neighborhoods are pursuing Proposition 218 ballots and staff warned Southbrook may need a Proposition 218 election in 2027 if no local solution is found.

What council asked for: Council signaled support for returning on July 7 with draft ballot documents for Measure P and directed staff to continue discussing LLMD mitigation strategies, including working with homeowner associations and evaluating special‑district balloting where needed.

What’s next: Staff will return July 7 with an ordinance/resolution to authorize ballot placement if council directs; LLMD options and any special‑district propositions will be scheduled for subsequent public hearings.