With this Update, I’m pleased to announce the release of the Draft Proposed Biennial Budget for Fiscal Years 2024-25 and 2025-26. We’ve once again produced a Digital Budget Book that is interactive and readable for the community to increase engagement and improve transparency. This year, for the first time since before the pandemic, the City has developed a two-year Budget that provides for an improved view of projections for revenues and expenditures related to programs, projects, and services.

The Proposed Biennial Budget is the product of the City’s staff team working in a collaborative manner to align resources that are consistent with the City Council’s and community priorities as determined in the newly adopted Strategic Plan, while continuing to maintain fiscal responsibility. The City has continued its recovery from the impacts of the pandemic by being thoughtful in supporting and providing exceptional services to our community, while remaining focused on building a financially sustainable organization. Going forward the City’s focus remains on sustainability, thoughtfully and strategically providing services as resources allow, while maintaining a healthy General Fund balance and adhering to the City’s financial policies.

Over the past several months, including during the Midyear Budget presentation in March and in the Community Budget Workshops, we have communicated to the Council and the public that the current state of the economy projects a period where our revenues remain flat but costs continue to increase. This is happening for agencies throughout the state and is occurring due to much that is out of the City’s control, such as high inflation, high interest rates, increasing insurance costs, high gas and energy prices, and a continuing form of recovery from the pandemic. Our Finance team and our Department Directors have been working extremely hard, looking at all available data, and going through the budget line by line in order to bring a budget that reflects the community’s priorities while being fiscally responsible. As a result, though the next two fiscal years will be tight, the Proposed Biennial Budget is indeed balanced. This was achieved using a combination of strategies including revenue enhancements, one-time savings, and some expenditure reductions with the goal of providing the level of service that our community expects, and without using General Fund reserves to balance the budget.

As long as the City faces this current external environment, we will need to continue to right-size the budget and consider additional strategies to ensure our long-term sustainability. This will include examining our revenues by conducting a cost allocation and fee study, and analyzing our organization to seek efficiencies by conducting a service delivery study. Engaging these studies will allow the City to objectively look at operational protocols and streamline processes, while ensuring that services are equitable and costs are effectively recovered. It is important to note, however, that because of the actions taken by the City Council over the past two fiscal years, we are able to review and implement these long-term strategies from a place of strength thanks to our high levels of General Fund reserves. While these next two fiscal years present a challenge, we are prepared to tackle this challenge with the same resilience and resolve that we have done in the past and will continue to do in the future.

I am extremely appreciative to the City Council for their leadership, courage, and continued unwavering dedication to improving the City’s fiscal position while staying true to the City’s values. I am also grateful to the El Cerrito community for your attention to the City’s budget issues and for all of your input and feedback that we’ve collected throughout the past several months. Our commitment to financial stability requires that all of us – elected officials, City staff team, and community – continue to work together to achieve success.

The Budget Process continues as the Financial Advisory Board will review the Draft Proposed Biennial Budget at their meeting on May 28, and the first City Council Budget Hearing will be held at the City Council Meeting on June 4. Please continue to check the City website at el-cerrito.org/BudgetProcess for details on the Budget.

As always, please take care of yourselves and each other.

Karen Pinkos

City Manager

City of El Cerrito