Fresno is once again facing a substantial budget deficit despite an increase in revenues.
City officials revealed during last week’s city council meeting that the deficit is projected to be at least $23.3 million, with the potential to be far greater.
Flashback: Fresno has had to grapple with budget deficits over the last few years ranging in the tens of millions of dollars.
- Two years ago the city used one-time COVID-19 pandemic relief funding – in the form of American Rescue Plan Act dollars – to help balance a $47 million deficit.
- Last year, with pandemic relief funding no longer available, the city balanced a $50 million deficit with 5% department cuts and an attrition rate of 6.18%.
Driving the news: The city is staring down a $23.3 million deficit even though general fund revenues are projected to come in around $6 million more than expected.
- Fresno Mayor Jerry Dyer noted during the council meeting that sales and property tax revenues are coming in strong. Sales tax is now expected to come in at nearly $4 million higher than expected, while property tax is only $100,000 off of projections. Business licenses are coming in around $800,000 higher, and franchise fees are over $1 million better than projected.
- Despite the strong revenue numbers, Dyer said expenditures are simply outpacing revenues
What we’re watching: Dyer said he would not be surprised if the deficit grew to around $35 million when the city holds its budget hearings in June.
- The Dyer administration is asking departments to cut their budgets by another 5% for Fiscal Year 2027 and maintain a 6.18% attrition rate. Dyer said the city may have to increase the attrition rate in order to balance the budget.
What they’re saying: City Manager Georgeanne White noted that this is the third consecutive year that the administration has asked departments to plan for cuts.
- “The low-hanging fruit is gone,” White said. “So frankly I have to say, not looking forward to the type of cuts that are going to be coming from departments, because they don’t have a lot of options left, and I think it’s going to be a very difficult process.”
Cannabis on track: Fresno has struggled to accurately project what the cannabis sales tax would be since the first dispensaries opened in 2022.
- It appears that the city finally has an accurate read on cannabis revenues.
- The city projected $5.4 million for its cannabis tax in Fiscal Year 2024, yet it only took in $2.4 million. Despite being far off, the city projected $7.1 million in cannabis revenue in Fiscal Year 2025. That was off yet again, with the actual total coming in under $3 million.
- The city tempered its expectations for the Fiscal Year 2026 budget, projecting $3.4 million in cannabis tax revenue. The mid-year budget review expects the cannabis tax revenue to come in close to $3.3 million.
