DATE: November 18, 2025
TO: Mayor and City Council
FROM: Interim City Manager
SUBJECT
Title
City of Hayward Budget: Budget Update and Adoption of Amendments to the City of Hayward’s FY 2025-26 Operating Budgets and Updates to Other Capital and Operating Budgets as Needed
End
RECOMMENDATION
Recommendation
That the City Council provide guidance to staff on the proposed steps to address the FY 2025-26 deficit which has been updated to reflect a projected deficit of $26.5 million and adopt the attached resolution:
1. Amending the Adopted FY 2025-26 Operating Budget for the City to reflect a balanced budget, as shown in this report,
2. Authorizing the City Manager to reduce expenditure appropriations for general fund departments, and to increase appropriations and modify transfers to/from other funds, and
3. Affirming that the remaining cost-control measures outlined in this report are within the City Manager’s existing administrative authority and are expected to be implemented by January 31, 2026, to eliminate the FY 2025-26 budget deficit.
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SUMMARY
On June 17, 2025, the City Council adopted the FY 2025-26 operating budget, which showed a starting fund balance of $31 million and an $8.9 million use of reserves. Since that time, staff identified a significant deficit for FY 2024-25 of approximately $30 million, resulting in the reduction of the starting fund balance for this fiscal year to approximately $1 million. In addition, staff updated the forecasted budget deficit for FY 2025-26, which staff projects to be $26.1 million, based on actuals from the last 14 months and information from the City’s tax consultants.
This report summarizes the updated budget deficit for FY 2025-26 and outlines proposed steps to close the deficit. Staff is seeking Council’s adoption of a resolution that amends the adopted FY 2025-26 Operating Budget to reflect the updated projections, authorizes the City Manager to take certain steps, and affirms the City Manager’s existing administrative authority to take additional steps necessary between now and January 31, 2026, to close the deficit, including, but not limited to:
1. Increase transfers from Measure C to the General Fund for operating expenditures aligned with the measure’s intended use, up to 60% of the Measure C revenue forecasted for this year,
2. Loan additional funds from Measure C to the General Fund at zero percent interest to cover expenditures aligned with the measure’s intended use,
3. Within legal limits, modify transfers to or from the General Fund when other funds have sufficient balances to cover operational costs for this fiscal year or when other funds are able to postpone expenditures, such as Internal Service Funds that are supported by the General Fund, Special Revenue funds with unrestricted balances, or Capital Improvement Funds that are supported by the General Fund,
4. Increase appropriations in other funds to account for adjustments in staff allocations or costs of services and supplies to other funds,
5. Reduce supplies and services budgets across departments,
6. Continue to implement changes to staffing, such as eliminating temporary staff positions, instituting additional overtime controls, and continuing strong vacancy controls, resulting in budget reductions for vacant positions, and
7. Identify additional personnel-related savings through ongoing discussions with labor groups, voluntary separations, and implementing layoffs as needed.
In addition to the items above, staff will continue to seek and monitor the receipt of one-time revenue sources, such as identifying potential back-taxes or fees that were not received in past years. Staff will also bring an item in December to increase the Transient Occupancy Tax to the voter-allowed limit for Council’s consideration.
Finally, this report summarizes the steps that staff are taking to create a long-term fiscal sustainability plan that will inform creation of the FY 2026-27 budget, including the planning of a fiscal sustainability work session planned for February 2026, as well as possible service impacts of some of these cuts.
ATTACHMENTS
Attachment I Staff Report
Attachment II Resolution