At its June 17, 2025 meeting, the El Cerrito City Council is scheduled to adopt the FY 2025–26 budget. While the proposed budget is presented as balanced, it includes a planned $2.3 million reduction in the City’s unrestricted General Fund balance to close a projected operating shortfall—continuing a troubling trend of using one-time reserves to fund recurring expenses.
The planned drawdown is detailed in Agenda Item 9A of the June 17 City Council packet on page 295. Following last year’s $3.45 million in midyear appropriations and additional one-time costs, the City has now used $12.7 million—or 55%—of its unassigned reserves over the past two years.
This approach reflects a deeper and ongoing structural issue. Despite presenting a balanced budget each year, the City’s expenditures consistently exceed recurring revenues. Rather than aligning the budget structurally or adjusting service levels or revenues accordingly, the City backfills shortfalls with reserves—deferring necessary decisions until future budget cycles.
While the City’s financial policy calls for a minimum unrestricted General Fund reserve of 17% of operating expenditures, the long-range projections in the FY 2025–26 budget show that El Cerrito will fall well below that threshold by FY 2027–28. The data highlights how the City’s reserve levels drop steadily and are projected to fall below the 17% target starting in FY27–28, with further decline in the outyears—signaling mounting structural pressure with no clear long-term fix in place. Even under the best-case scenario presented in the financial forecast, the City expects to rely on unrestricted reserves through FY 2032–33—another seven years of reserve depletions instead of permanent solutions.
The Council already approved major midyear spending earlier this year to cover outstanding obligations and unfunded needs from the prior cycle. Now, instead of right-sizing the base budget, the City is doubling down on a strategy of absorbing cost pressures through temporary reserve usage—a method that leaves little room to maneuver if the economy slows or unexpected costs arise.
These are not one-time shocks. The spending pressures embedded in the FY 2025–26 budget are ongoing. Yet the solution being applied is temporary. As the staff report notes, the City is using one-time funds to support what are, in many cases, continuing service demands and cost obligations.
If adopted, the FY 2025–26 budget will mark the third consecutive year that El Cerrito has relied on the General Fund balance to prop up its operations—without implementing a long-term correction. And that reliance doesn’t end here. The City’s own projections show continued drawdowns for at least seven more years, signaling an unsustainable path that chips away at core reserves year after year while structural imbalances go unresolved.
The community deserves a more transparent discussion about trade-offs, priorities, and long-term strategies. A truly balanced budget isn’t just about plugging holes—it’s about ensuring the City can meet future obligations, maintain public trust, and deliver stable, quality services without burning through its financial safety net.
For those interested in the data, the proposed FY 2025–26 budget and reserve forecast can be found in Agenda Item 9A of the June 17, 2025, City Council packet.
El Cerrito Committee for Responsible Government (ECCRG) 