Logo courtesy of the City of Gridley

GRIDLEY, CA (MPG) – Gridley officials warned during a special budget workshop that the city’s general fund reserves continue to decline as public safety, personnel and infrastructure costs rise faster than revenues.

Finance Director Martin Pineda presented the City Council with an overview of the proposed 2026-27 budget during the June 4 study session, outlining projected expenditures, revenues and long-term financial concerns.

Pineda said general fund expenditures are projected at about $9 million for the upcoming fiscal year, while revenues are estimated at $6.5 million, leaving an anticipated shortfall of roughly $3 million.

“Now is the time to focus on general fund revenues and developing a plan to increase revenues and decrease expenses where possible,” Pineda told the council during the workshop.

He said personnel costs remain the city’s largest expense and include employee wages, retirement obligations and contracts with outside agencies such as Bennett Engineering and Cal Fire.

Pineda also highlighted the city’s growing unfunded accrued liability costs through CalPERS, commonly referred to as UAL, and said the city plans to begin funding a Section 115 trust account intended to offset future pension obligations.

Pineda said the city’s general fund reserves and related balances have steadily declined over the past several years and are projected to continue dropping if spending trends continue.

City Administrator Elisa Arteaga said the city must begin examining long-term options to stabilize the general fund while maintaining public safety services.

“We need to do a deep dive into the general fund and really provide some information for the council to make those educated decisions on best ways to increase our general fund and continue to have a healthy reserve balance,” Arteaga said.

Arteaga said rising fire and police costs continue to pressure the city budget. She noted staff has aggressively pursued grant opportunities for both departments, though several applications have either not been awarded or remain pending.

“We are very fortunate to have our own police department and I think we have a great fire department as well,” Arteaga said. “But every year those costs for supplies, uniforms, labor, we are competing with other agencies.”

The workshop also reviewed projected changes across several city departments and enterprise funds.

The police department is projected to increase by about $305,000, largely tied to personnel expenses and retirement costs, including a projected $130,000 increase in UAL obligations. Pineda said overtime costs are budgeted through the COPS fund, while two positions are planned to be funded through the public safety fund.

The recreation department is projected to increase by approximately $104,000, primarily due to the addition of a recreation manager position and related personnel costs.

Pineda said special revenue expenditures are projected at $2.6 million, down from $3.7 million in the current fiscal year. The budget includes about $407,000 in SB1 funding as the city plans to restart pavement projects during the upcoming fiscal year.