San Carlos adopts 2-year budget

For fiscal years 2025-26 and 2026-27, San Carlos is budgeting to deficit spend, with the majority of expenditures dedicated toward major capital project improvements over the next five years, but the city’s bountiful reserves will mitigate the loss, Administrative Services Director Rebecca Mendenhall said in a staff presentation.

For fiscal year 2025-26, the city’s general fund looks to receive $61,584,200 in revenue, and spend $66,938,825. For the following fiscal year, revenue is projected to be $64,155,000 and expenditures to be $69,779,345. 

For both years, public safety is the highest percentage of expenditures, at around 42% of the total budget. Then, general government expenditures, Public Works, Community Development and Parks and Recreation, in that order. 

“We are anticipating small deficits in both fiscal years, and we’re going to use the unassigned or unrestricted funds to cover those,” Mendenhall said. 

For fiscal year 2025-26 and fiscal year 2026-27, the unrestricted fund balances are at approximately $1.36 million and $1.28 million, respectively. City staff expects these balances to likely increase, Mendenhall said. 

A major component of the city’s dedicated revenue is toward capital improvement funds, as part of a $164 million five-year investment to improve the sewage system, street improvements, traffic and transit, child care and more. There is a slate of potential projects not currently budgeted for, though, which may require changes to the dedicated funds, Mendenhall said. 

“While we are funding $164 million of projects, we do have $364 million of projects that are on the unfunded list,” Mendenhall said. 

The city has a hefty amount of reserves saved, far higher than the 20% of the budget minimum. For fiscal year 2025-26, there’s a 60% budgeted reserve at approximately $40 million. For the following fiscal year, the reserve is budgeted at 47% at approximately $33 million. 

With the excess of funds available, Councilmember Adam Rak proposed dedicating $30,000 toward “activating” the 700 block of Laurel Street this summer and fall, at the parks and recreation department’s discretion. Vice Mayor Pranita Venkatesh added she’d like to “advocate for some cultural events” downtown as a “welcome change.” 

Along with this amendment and one made by Mayor Sara McDowell to work toward a uniform enterprise software system for the Public Works Department, the council approved the two-year budget unanimously.