The old and new buildings of Sacramento’s City Hall stand downtown on July 12, 2018.
Randall Benton
Sacramento Bee file
Sacramento’s funding for homelessness services is projected to quadruple if the city doesn’t receive state funding, according to a Tuesday presentation to elected leaders on the city’s $66 million budget deficit.
In 2023, the city allocated $12.5 million from its own coffers and received about $20 million from the state to help address homelessness. For the upcoming fiscal year, the city forecasts about $48 million in homeless services funding from its general fund, the city’s main reservoir for money generally spent without restrictions.
“This going to be a tough year for all of us,” Vice Mayor Karina Talamantes said of balancing the city’s budget.
Local municipalities typically draw money from the state’s Homeless, Housing, Assistance and Prevention program to help place Californians in permanent housing. But Gov. Gavin Newsom allocated $500 million in grant money for this year’s state budget, down from earmarking $1 billion in previous years.
The city of Sacramento presented Tuesday its projected funding for homeless services as the City Council considers closing a $66 million budget deficit. City of Sacramento
The dearth of funding comes as the Sacramento City Council kicked off discussions Tuesday on how to balance a $66.2 million deficit as, for the third consecutive year, the city faces a budget shortfall.
The city is contending with its expenditures outpacing its revenues. The budget is squeezed by increased homelessness spending, higher labor costs, inflation and retirement liabilities, said city finance director Pete Coletto.
The past two years, the Sacramento City Council raised parking fees and axed dozens of vacant positions to help balance its multimillion-dollar budget deficits. This year, City Manager Maraskeshia Smith has said the Police Department’s vacancies will be examined. Police spokespersons have previously said layoffs are not a possibility.
Dozens of students flooded Tuesday into City Hall and pleaded with council members to keep a program in which a police officer mentors students. A representative from the Downtown Sacramento Partnership, an organization which advocates for businesses in the city’s core, has said developing the area cannot happen without officers.
Smith said she has concerns about having fewer than 600 police officers in the city. Local news reports including from KCRA said the Police Department had about 639 officers in June 2025, and the city in 2025 budget documents reported having 650 in March 2024.
Monday night’s stabbing in DoCo — which left a 21-year-old man dead and one woman hospitalized — is a perfect example of why there should be more officers, Smith said.
The budget balancing act is what lies ahead for city staff and elected officials in the upcoming months prior to adopting their final budget.
Mayor Kevin McCarty and Smith have both said they hope to avoid layoffs.
“It makes it really difficult for us to sleep at night when you know that these are decisions that you have to make moving forward,” Smith said. “And we want to try not to make those decisions. We want to have less impact on our employees.”
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Ishani Desai is a government watchdog reporter for The Sacramento Bee. She previously covered crime and courts for The Bakersfield Californian.