Huntington Beach uses reserve funds to balance budget for 2026-27
- Share via
A growing structural deficit has required more and more juggling in order to pass a balanced budget in Huntington Beach.
The City Council unanimously voted to approve the $592 million budget for fiscal year 2026-27, which begins on July 1, at last week’s meeting.
The use of reserve funds, and the elimination of several municipal positions, were necessary as the city faces a structural deficit estimated at approximately $15 million.
Mayor Casey McKeon noted during a study session on May 19 that expenses were increasing about 5% a year — including rising pension debts — while revenue is only increasing about 3% a year.
“We can try to keep cutting, but we’ve basically already cut as much as we can,” McKeon said. “What we need to do ... is find new sources of revenue.”
Huntington Beach has available reserves of about $99 million, based on the audited annual comprehensive report for fiscal year 2024-25.
“The city has built and maintained a strong reserve position over time,” Huntington Beach acting chief financial officer Zack Zithisakthanakul told the council during the study session. “This has been built over the course of the last 10 or 12 years. However, while the reserves level remains healthy, it’s important to keep reserve preservation in mind as we continue with the budget process. Reserves are generally intended to support one-time or unforeseen costs, and are not designed to fund ongoing operational expenditures on a long-term basis.”
The 2026-27 fiscal year budget includes $328.2 million in both general fund revenues and expenditures, according to a presentation made by Zithisakthanakul and finance manager Robert Szilagyi at last week’s meeting.
Property taxes and other local taxes continue to be the city’s biggest form of revenue, projecting to combine for about $219 million in the new fiscal year.
In terms of expenses, public works is the largest funded department at about $186 million. That’s followed by the police and fire departments, which combine to account for about $173 million in expenditures.
Huntington Beach has 990.75 full-time equivalent staff positions, with about 85 unfilled positions. Councilmember Andrew Gruel noted that those unfilled positions still have money allocated toward them in the budget.
“At the end of the year, in many cases, we true up the budget ... and we end up with a surplus as we reconcile that,” Gruel said during the study session. “A large majority of that could be some positions that perhaps either fall off or go unfilled through the timeframe.”
The city will be eliminating several vacant positions to control costs. The city will also un-fund 15 vacant police officer positions, while adding one new lieutenant position and reclassifying other employees.
“We asked the police department to identify vacant positions that they felt could be unfunded for a time period,” Szilagyi told the council. “The safety of the city is not in jeopardy at all ... The positions are still there, they’re just not being funded.”
However, some residents questioned the wisdom of such a move.
“Reducing staffing at the police department and community services causes a negative cycle,” Perry Clitheroe said in an email to the council. “Reducing the quality of government services reduces property values and tax revenues, contributing to neglect and decay. Our anti-growth lawmaking has caused enough damage, please do not compound these harms.”
