By Sacramento City Express<\/p>\n
The City is facing a projected $66.2 million budget deficit as it begins work on the fiscal year 2026\u201327 budget, as presented to the\u00a0City Council on Feb. 10.<\/a><\/p>\n The deficit is not the result of a recession but rather reflects a long-term structural imbalance in the City\u2019s finances, where ongoing expenses continue to grow faster than ongoing revenues.<\/p>\n \u201cThis budget moment requires us to make hard choices, but also smart ones,\u201d City Manager Maraskeshia Smith said. \u201cWe cannot cut our way out of a structural deficit. Our focus must be on stabilizing the budget while also growing Sacramento\u2019s economy, improving efficiency and making sure we are delivering the services residents expect.\u201d<\/p>\n Sacramento\u2019s structural deficit has developed over several years and is driven by multiple factors, including expanded services such as homelessness response and sheltering, new labor contracts, inflation and rising pension and insurance costs.<\/p>\n Voter-approved measures have also redirected some General Fund resources, while revenue growth has not kept pace with these commitments.<\/p>\n \u201cThis week, we began our 2026 budget process by redirecting $7.7 million in current-year savings to help soften the impact of our ongoing deficit,\u201d said Mayor Kevin McCarty. \u201cWe still have a significant deficit, and, over the next three months, we\u2019ll target strategic budget reductions that minimize impacts on core city services like public safety and parks. Moving forward, we can\u2019t just slash budgets; we need to invest in policies and tools to grow our economy.\u201d<\/p>\n