Given the pressing nature of the fiscal crisis facing the city budget, Mayor Jung and other city executives are facing questions on who knew what when, with Councilman Zahra questioning why no one ever took action if the budget was so bad, pointing to Jung\u2019s own statements praising the city\u2019s financial position.\u00a0\u00a0<\/p>\n
\u201cHow can he say we all knew it was not balanced when he was claiming that it was?\u201d Zahra asked in a Monday interview.\u00a0<\/p>\n
What Happened to the Money?<\/p>\n
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A large pothole on Washington Avenue in Fullerton on Saturday, Sept. 17, 2022. Credit: Zia Bella Blair<\/p>\n
By the end of June, city staff are projecting they\u2019ll have roughly $26 million in reserves.\u00a0<\/p>\n
However, around $10 million of that is already allocated to be spent on other projects or for other funds.\u00a0<\/p>\n
That leaves just $16 million that city leaders can use to balance the budget as their staff warn them they\u2019re facing a $13.7 million shortfall.\u00a0<\/p>\n
Unless the city cuts out that shortfall by slashing spending, that would take the reserve to around 2% of the city\u2019s budget by June 2027 \u2013 the city\u2019s policies require them to maintain a 10% reserve.\u00a0<\/p>\n
\u201cIf no adjustments were made, reserve levels would decline to approximately 2% by the end of fiscal year 26-27 which is well below the city\u2019s reserve policy,\u201d said Steven Avalos, The Interim Director of Administrative Services at the March 17 city council meeting.<\/p>\n
City council members also ran through $10 million of unassigned reserves in recent years.<\/p>\n
Around $4.4 million was used to help patch the city budget, $2.7 million was allocated for specific purposes like fixing roads and capital projects and another $2.9 million was rerouted to the city\u2019s successor agency after staff realized it was improperly marked as a reserve.\u00a0<\/p>\n
While state law requires cities adopt balanced budgets, municipalities like Fullerton often do that by moving money over from reserves and other areas to make up for the spending deficit.<\/p>\n
City Leaders Point Fingers\u00a0<\/p>\n
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People walk by Fullerton City Hall on Tuesday, April 11, 2023. Credit: JACK SUNDBLAD, Voice of OC<\/p>\n
Now, Jung and Dunlap are saying city leaders knew for years about the problems, with Jung calling Zahra\u2019s \u201cgrandstanding\u201d at council meetings counterproductive.\u00a0<\/p>\n
\u201cThe gumption that he has to somehow make this about him, I just find appalling,\u201d Jung said.\u00a0<\/p>\n
Dunlap said the city\u2019s finances have \u201cbeen no surprise\u201d and said Zahra \u201cdoesn\u2019t understand how finances work.\u201d\u00a0<\/p>\n
\u201cThis whole notion that somehow people weren\u2019t aware is nonsense,\u201d Dunlap said. \u201cUnless they\u2019re completely turning a blind eye to the info I don\u2019t understand how someone could not be aware.\u201d\u00a0<\/p>\n
But Zahra questioned how he was supposed to know about the budget problems when Jung was campaigning for county supervisor on the pledge he fixed the budget, noting that he thought the budget was balanced for years.\u00a0<\/p>\n
\u201cWhen it\u2019s something that\u2019s presented as balanced, there\u2019s a level of trust you have to put in,\u201d Zahra said. \u201cHe (Fred) claims he balanced the budget. If your house is made of glass, you shouldn\u2019t be throwing stones at other people.\u201d<\/p>\n
Jung was recently ordered by a judge to remove his claims on the ballot that he\u2019d \u201cturned around a $9 million deficit into a balanced budget.\u201d\u00a0<\/p>\n
Jung called Zahra\u2019s comments \u201cchildish,\u201d and said that his claims about the budget were just for that one year.\u00a0<\/p>\n
\u201cThe budget was balanced for that year. The budget\u2019s not balanced in perpetuity,\u201d Jung said. \u201cBut we knew there was a fiscal perfect storm coming five years ago.\u201d\u00a0<\/p>\n
Councilwoman Shana Charles said staff didn\u2019t make clear the accounting error until March.<\/p>\n
\u201cFrom my recollection. I don\u2019t recall staff telling me about it in stark terms.\u00a0 I do remember them saying that we\u2019re working on the budget. The budget is going to be tighter than we expected,\u201d she said in a Monday phone interview.<\/p>\n
\u201cBut I really didn\u2019t get it laid out for me until the day before the March 17 meeting.\u201d<\/p>\n
Charles said in her first year on the city council staff did warn elected officials they were headed towards a deficit situation and the reserves would be run through by the 2027-28 fiscal year.<\/p>\n
\u201cNow, we\u2019re looking at that our reserves are going to be depleted by the end of 2026-27 next year. It\u2019s staring us in the face,\u201d she said.<\/p>\n
\u201cWe need to definitely do a thorough review of what went wrong and find that out and do better in the future on that but at the same time, we just have to grapple with the reality that we find ourselves in, which is that our reserves are lower than we thought by quite a bit. Our deficit is bigger than we thought.\u201d<\/p>\n
Councilwoman Jamie Valencia did not respond to a request for comment Monday.<\/p>\n
Ignoring Financial Alarms?\u00a0<\/p>\n
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A train passes by Downtown Fullerton on Oct. 5. 2025. Credit: ERIKA TAYLOR, Voice of OC<\/p>\n
Deputy City Manager Daisy Perez said staff informed council members about the $2.9 million accounting error and the rest of the reserves months ago in a February 12 memo she forwarded to Voice of OC.\u00a0<\/p>\n
To review a copy of the memo, click here<\/a>.\u00a0<\/p>\n \u201cCouncil members had been notified of the $2.9 (million) in February so I was surprised that some recognized that for the first time, when they had been notified a month prior in detail about that finding,\u201d Perez said in a Monday phone interview.<\/p>\n Perez said staff was ready to discuss the issue at the Feb. 17 city council meeting but elected leaders didn\u2019t pull it off the consent calendar portion of the meeting \u2013 a set of items typically voted on as a block without discussion.<\/p>\n \u201cWe were surprised that they did not pull it,\u201d she said, adding the city manager put up a subsequent discussion in March to be transparent with officials on the city\u2019s financial position.<\/p>\n \u201cWe were surprised that some of them were acting surprised because they were not told the night before or that day, they were told at least a month before,\u201d Perez said.\u00a0<\/p>\n Fullerton city staff also say they publicly warned city council members years ago of a structural budget deficit and the impacts it will have on their reserves, if it was left unchecked, and elected leaders didn\u2019t do much to quell it.<\/p>\n Perez said officials didn\u2019t flinch at the thought of using almost the entirety of their $10 million in unassigned reserves back then to cover what was initially projected to be a $9.4 million deficit a couple of years ago.<\/p>\n \u201cMy biggest thing is the lack of reaction from Council or the just overall acceptance of adopting a $9.4 million deficit in the first place. There was not a lot of resistance at that point to bring down the deficit any further and the council was pretty accepting of going over budget,\u201d she said.<\/p>\n Perez added that even with knowledge of the deficit, officials didn\u2019t try winding it down.<\/p>\n \u201cEverybody knew that we had a deficit budget,\u201d Perez said. \u201cThey were fine with it. They didn\u2019t ask for any further cuts. They were perfectly fine using the unassigned (dollars) so we had $10 million and they were fine using $9.4 million of that for the deficit.\u201d<\/p>\n In the end, the deficit for the 2024-25 fiscal year turned out to be $5.7 million after property tax revenue came in higher than officials anticipated, according to Perez.<\/p>\n Councilwoman Charles said it was unclear how bad of a position they were in because the staff kept talking about having about $30 million in reserves last year.\u00a0<\/p>\n However, $10 million of that had already been allocated to be spent on other projects.\u00a0<\/p>\n \u201cThey kept mentioning this $30 million number and that $30 million number was inflated and so that is not how large our reserves are, essentially, so it seems to me like it was being double counted,\u201d Charles said.<\/p>\n Years of Budget Deficit Warnings<\/p>\n In June 2024, former Councilman Bruce Whitaker was the lone dissenting vote against adopting the budget.<\/p>\n Whitaker, at the time, said officials should look at ways to narrow the budget gap before voting on the spending plan.<\/p>\n \u201cOne time monies that are being used this year to narrow the gap \u2013 It\u2019s going to be a band aid, but next year, we won\u2019t have those one time monies, and the gap will widen just on the natural next year so it is a pretty disturbing outlook,\u201d he said.<\/p>\n Perez said efforts to get a tax measure on the ballot in the aftermath of that debate failed to get a majority support from elected leaders despite their fiscal projections.<\/p>\n Charles said since then they froze some vacant positions, formed a fiscal ad hoc committee who are looking at tax measures and tried to get more grants to offset costs.<\/p>\n Fullerton\u2019s Bleak Financial Future<\/p>\n City leaders have been struggling to balance Fullerton\u2019s finances for years, with a failed sales tax measure in 2020<\/a> and questions over how to rebalance the city\u2019s spending.\u00a0<\/p>\n But things seemed to improve on the city\u2019s budget disclosures after they received millions of dollars from the federal CARES Act, which sent money to cities across the county that were impacted by closures during the COVID-19 pandemic.\u00a0<\/p>\n However, that money didn\u2019t fix the city\u2019s structural imbalance of funds, a bind Jung said city leaders are stuck in as residents oppose cutting any services but also shoot down any proposed sales tax increases.\u00a0<\/p>\n \u201cThe only way to have mitigated any of this is to have cut in a massive way, cut services. But the fact is citizens didn\u2019t want that,\u201d Jung said. \u201cWe tried that in 2021, and they didn\u2019t like it. They resoundingly said we don\u2019t want services cut.\u201d<\/p>\n After that, city council members signed off on a raise for firefighters, hired more of them and brought their ambulance services in house, which ran up costs on the already taxed budget according to Jung.\u00a0<\/p>\n Now, he\u2019s calling on council members to put another sales tax in front of voters, this time aiming the tax dollars at fixing the city\u2019s roads.\u00a0<\/p>\n \u201cIs it the solution? Probably not. But it is a solution,\u201d Jung said. \u201cAt some point, you require a hard look, and we\u2019re going to take that this year. It\u2019ll be a fairly extensive and robust process, with a lot of public engagement throughout.\u201d<\/p>\n Perez also acknowledged in an open letter that even if the city gets a sales tax passed this year, it won\u2019t start bringing them any money until 2027, which means something has to change now.\u00a0<\/p>\n Zahra questioned why Jung and other city council members didn\u2019t fix the budget over the past few years if they knew it was broken, highlighting he\u2019d been on the outside of major votes for years.\u00a0<\/p>\n \u201cRight now we know that the budget is not balanced, it never was, and the reserves were being inflated to just show that we have a good financial standing,\u201d Zahra said. \u201cIf he (Fred) knew this was not balanced, why didn\u2019t he do something about it?\u201d<\/p>\n Jung said the blame for the city\u2019s current budget falls on the shoulder of every council member.\u00a0<\/p>\n \u201cI\u2019m equally to blame, I never said I wasn\u2019t,\u201d Jung said. \u201cWe own this. We own our decisions.\u201d\u00a0<\/p>\n Charles said Jung has insisted on setting the council agenda for years.<\/p>\n \u201cIt is interesting how he is, for the first time since I\u2019ve been on council, trying to lock arms with the rest of us and act like we are all in this together, when that has not been the case,\u201d she said.<\/p>\n \u201cIt sounds like he\u2019s trying to spread the blame,\u201d Charles continued. \u201cI\u2019d rather focus, though, on what we can do to make things better in the future.\u201d<\/p>\n Noah Biesiada is a Voice of OC reporter. Contact him at nbiesiada@voiceofoc.org<\/a>.<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/04\/Taylor_DowntownFullerton_Oct2025_-13.jpg\")
A view of part of the SOCO District in Downtown Fullerton on Oct. 5, 2025. Credit: ERIKA TAYLOR, Voice of OC<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/04\/Taylor_DowntownFullerton_Oct2025_-18.jpg\")
A view of Downtown Fullerton on Oct. 5, 2025. Credit: ERIKA TAYLOR, Voice of OC<\/p>\n