25/26 Budget Update - Good News!
At the June 3rd City Council meeting, the preliminary budget for the upcoming fiscal year was reviewed—and there’s good news to share. Going into last year, the city expected a $1 million deficit, but instead, we’re now projecting a surplus of about $700,000. Strong cost management made a big difference—and a few lucky breaks helped too, like better-than-expected revenue from fines, building permits, and interest earnings.
Looking ahead, we’re starting the new fiscal year with approximately $24 million in General Fund reserves. Here’s how that breaks down:
$5.5 million is committed as an emergency reserve (25% of the General Fund budget).
$4.5 million remains unassigned and available for flexibility.
This leaves about $10 million available for economic emergencies or strategic investment.
Capital Improvements: Fixing our Infrastructure
The city’s $11 million capital improvement plan—which includes paving streets, repairing sidewalks and stairs, and improving city facilities—is being funded through a mix of sources. Roughly $9 million is city-funded, drawing from the General Fund, Parking Fund, Tidelands Fund, gas tax revenues, and other designated funds. The remaining $2 million comes from Measure L, the voter-approved sales tax set aside specifically for infrastructure.
This careful structuring allows us to invest in Sausalito while maintaining adequate core reserves—a smart balance of stewardship and progress.
Revenue Forecasts are Conservative
At the same time, there’s real caution around future revenue. Sausalito depends heavily on tourism, and we’re watching visitor trends closely this summer. Transient occupancy tax (hotel tax) and sales tax revenue have both shown signs of softening, and that affects what we can fund going forward.
Longer Term: Build Resiliency
Looking beyond this year, it’s clear that we can’t rely on luck or short-term surpluses to sustain our infrastructure investments. To maintain and expand this level of investment, we’ll need to both grow existing revenue streams and develop new ones—whether that’s through economic development, smarter use of city assets, or updating outdated fee structures. Without a stronger, more resilient revenue base, it will be difficult to keep up with the long-term needs of our streets, facilities, and services.
Pension Liabilities
On pensions, the city continues to tackle our long-term liabilities. Payments are still on track to rise through the decade as predicted, but previous councils built up a $4 million Section 115 Trust to help smooth the peak costs. Staff presented several smart options to manage those obligations using the money saved in the Trust, minimizing the burden on future budgets.
10 Year Financial Projection: Coming Soon
Finally, we’re glad to see momentum toward a 10-year financial plan. This long-range roadmap is critical—it helps us forecast revenue, expenses, pension obligations, and capital needs. With it, we can better plan for major investments, identify challenges early, and make smarter, steadier decisions year to year. It’s about building stability, not just reacting to each budget cycle.
The staff’s budget presentation can be found here. Thanks to all who are helping shape a more resilient, better-prepared Sausalito.
