Huntington Beach draws from reserves to adopt structurally balanced 2025-26 budget

The Huntington Beach City Council has passed a budget with a listed surplus of $1.1 million for fiscal year 2025-26, though the city will be dipping into reserves and slashing some programs to do so.

The council unanimously voted to adopt the budget at its June 3 meeting. The fiscal year begins July 1.

Robert Torrez, the city’s interim chief financial officer, presented the budget at the meeting. The nearly $555-million budget includes more than $298 million in general fund revenues.

Torrez said the budget balancing included the elimination of six positions, including a deputy city manager and senior deputy city attorney, which would save about $2 million. Nearly $3 million in ongoing operating expenses will also be cut, including the mobile mental health program Be Well. Laguna Beach also recently decided to scale back its Be Well hours.

Another part of the budget balancing included withdrawing $1.5 million from a Section 115 trust, as well as reducing $4.5 million in general fund transfers to self insurance worker’s compensation and general liability funds. Additionally, the budget calls for a transfer of $2.4 million to the general fund from the Waterfront Loan repayment.

Mayor Pro Tem Casey McKeon said he and his colleagues have worked hard every year since being elected in 2022 to turn a budget deficit into a surplus.

“This one was the hardest one — $8.8 million and we did it,” McKeon said. “To touch on the reserves, we used strategic and prudent use of reserve funds, which is what these reserve funds are designed for in situations like this.”

But some residents were critical of the portrayal of a balanced budget, especially with more budget deficits projected in the future.

“We are in fiscal crisis, and the way you present things will not change those facts,” Ken Inoue said.

Huntington Beach Mayor Pro Tem Casey McKeon, shown in 2023, moved to hire one additional fire captain rather than two.

(Daily Pilot screenshot)

Nearly half of the city’s revenues are taxes, with property tax accounting for 37.9% of the revenue and sales tax an additional 17.6%.

More than half of general fund expenditures go to the police department (32.2%) and fire department (21.6%) combined.

Council members also discussed hiring additional fire captains, with McKeon moving to add one more administrative fire captain and upgrade the ambulance model from 14 hours to 24 hours.

The department had asked for two additional captains, Councilman Chad Williams said. He then asked why the council couldn’t approve the second captain position for special events, calling it a necessity rather than a luxury.

“They wouldn’t be asking for it if they didn’t need it,” Williams said. “We have over 1,000 employees in the city, and I can’t wrap my mind around the idea that these two fire captains would somehow end up at the very bottom of that barrel.”

But McKeon said he had talked with officials there.

“They understand that we need to get our revenues up and our expenses down, and we’ll readdress that second captain position later this year,” he said.

Williams’ substitute motion for two administrative fire captains rather than one failed 5-2, with only Don Kennedy joining Williams in support. McKeon’s amended motion for the one captain then passed 6-0-1, with Williams abstaining.