Sacramento passes budget without layoffs but warns of $90 million future deficit

Mathew Miranda, The Sacramento Bee on Jun 11, 2025

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SACRAMENTO, Calif. — Sacramento closed its budget gap Tuesday night, but a growing structural deficit threatens deeper cuts in the years ahead.

The City Council approved the $1.67 billion spending plan in a 8 to 2 vote, addressing a $62 million budget deficit with several fee increases and the elimination of more than 80 vacant positions. Unlike in previous proposals, the budget will not lead to city layoffs and reinstates funding for a residential on-street parking program, immigrant legal aid and youth events.

Still, the city remains in a structural deficit — meaning its expenses are growing faster than its revenues. The shortfall is projected at $60 million next year and could potentially reach $90 million by 2030. These estimates do not account for any state homeless funding, which fell short of expectations this budget cycle.

Some city leaders, including Councilmember Lisa Kaplan, cautioned that future deficits could lead to tougher choices, such as implementing layoffs and larger reductions to departments. Councilmember Mai Vang joined Kaplan in voting against the budget.

“We know the minute this passes, which I know this will, that we are already $60 million in the hole,” said Kaplan, who had advocated for further cuts. “I don’t believe that is being responsible.”

Tuesday’s meeting marked the end of the city’s monthslong budget process for the new fiscal year, which begins July 1.

Interim City Manager Leyne Milstein released her proposed budget in April. Among the recommendations were 12 layoffs, parking fee hikes, cutting $1.3 million from youth services and creating a program to charge some residents for on-street parking. In the weeks that followed, the council decided to restore funding for youth programs and turn down the residential parking fee proposal.

Last week, the city announced it would not lay off anyone and instead transition employees into other positions. Finance Director Pete Coletto said on Tuesday night that a proposed fee hike for senior programs would only apply to non-residents.

“That is a significant accomplishment given the challenges that that we face,” said Councilmember Roger Dickinson in regards to no city layoffs.

The approved budget still relies largely on fee increases and cutting vacancies, more than 50 of which are in the city’s Department of Youth, Parks and Community Enrichment. The Police Department will lose 23 vacancies. Departments often use vacant positions to offset costs including overtime pay.

Parking fees will also increase for the second straight year. Come July, on-street meters will charge $3, $4.50 and $6 per hour based on tier.

Monthly rates at the Memorial, Old Sacramento and Tower Bridge parking garages will increase by $10. These parking garages will also raise their half hour rate from $1.50 to $2.

Fire prevention fees, annual charges for owners of habitable structures, will grow as well. In many cases, the fees are expected to double in cost, depending on the type of structure. Some restaurants and small businesses will only have to pay 75% of the full cost.

“Overall, I think this is a solid budget, the best we could do,” said Mayor Kevin McCarty. “None of the choices that we saw day one were ones that we wanted to do, but we have a job. We’re not the federal government. We can’t print money. We have to live within our means.”

Much of Tuesday’s budget discussion — like in past meetings — centered around the Police Department’s $255 million budget, which is an all-time-high and largest budget in the city.

The vast majority of the 28 registered public speakers called on the council to redirect some of that money, particularly by eliminating the department’s more than 150 vacancies. These speakers argued that such funding would benefit the city more if used on youth and community programs.

“We know that there is money in a place called the police budget,” said DeAngelo Mack. “There are vacancies sitting there while people are dying. You got answers in the audience begging you to give them the funds to support the community they know and the community that trusts them, and yet you are sitting on your hands for vacancies.”

Vang, who voted against the budget for the third straight year, used some of her comments to recall a community survey taken last year on budget priorities. In the survey, residents identified the police department as their preferred number one reduction option.

“Until we transform how we allocate these resources to achieve our collective goals, we will continue to fail the outcomes that our community is demanding,” Vang said.

The new budget takes effect July 1. The elected body is expected to receive a mid-year forecast on the following year’s budget in December or January.

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