Tonight, the City Council will hold what should have been its most important meeting of the year thus far — that is, of course, until it got bigfooted by the closed session meeting last week where four members of the council voted to unceremoniously boot City Manager Lori Ann Farrell Harris without cause.

I don’t think a study session can hold a candle to that kind of event. But it is still substantively very important. The city’s finance department has released the initial draft of the operating budget for next year and it will present it to the city council tonight. So if you decide to tune into one public meeting this year, let it be this one.

I haven’t had a chance to dig into the numbers, but as previewed by Finance Director Carol Molina in prior meetings, the budget does anticipate asking the City Council to preemptively declare that Capital Asset Needs (CAN) ordinance does not apply to next year’s budget due to the presence of an “economic downturn”. The amount of forgone CAN money is equivalent to about $6.9 million.

In other words: if you think the CAN should apply to next year, the city is facing a true structural deficit of almost $6.9 million. If you think that the CAN ordinance is a dumb paper requirement, then everything is hunky-dory and Director Molina has delivered yet another balanced budget.

So, are we in financial trouble? I guess it depends on your perspective.

The operating budget is vast, and I am sure that the staff presentation is going to cover far more than what has been released to the public in the agenda documents. Therefore, I hesitate to guess where the conversation tonight will go. But since that is no fun, I will give it a go anyway:

• As noted above, I expect the CAN ordinance “waiver” for FY 2025-2026 to be a topic of significant conversation.
• Notably absent from the materials are the “options” requested by Mayor John Stephens and Council Member Mike Buley in the last City Council meeting regarding the 2025/2026 CAN deferrals. During that meeting, the two of them effectively cooked up a motion that directed staff to provide alternatives to the waiver, including: revising, or repealing the CAN ordinance, tapping into the City’s reserves, terminating or revising city contracts, eliminating vacant positions, and removing other CIP projects that weren’t proposed by staff. Since those options weren’t included in the materials provided for the meeting, I can only assume it will be included in the staff presentation or perhaps punted to another meeting.
• I also didn’t catch, but perhaps I just missed, any acknowledgment of the motion made last week to require the city to start repaying the deferred $2.9 million of CAN monies from last year beginning in this year’s budget. If I recall that motion removed the stipulation that the repayment would start when additional funds became available. Thus, the hole for next year may be slightly higher than $6.9 million.
• Obviously, the recent firing of the city manager will weigh heavily on everyone. I am curious the extent to which City Council members will address her removal during their comments. Unlike a regular meeting, a study session does not contain a public comment period at the beginning of the meeting, and there is no time set aside for council member comments. So if it is addressed, I would expect it would come up obliquely in the discussion of the budget.
• As an aside: I think the city or the city council members themselves should start talking publicly on why they made that decision. It is absolutely bizarre for a city council to fire someone who effectively served as the city’s CEO without explaining why. Even a vague quote, such as “we wanted to go in a different direction,” would be better than the conspicuous silence that is pervading the local media at the moment.
• I did notice that the staff is proposing to eliminate one of the community outreach worker positions. This only jumps out to me because I wonder if it is connected to a broader conversation about the cost-effectiveness of the spending we are doing on our bridge shelter. I get that is a third rail, but I think it is worth pointing out in this financial environment. I have written on the concerns other cities are raising about their own shelter services in a prior post.

I will also note that the Finance & Pension Advisory Committee we’ll get its own bite at the operating budget apple tomorrow at its afternoon meeting. So if you can’t make the meeting tonight, maybe you should swing by that one instead.

Buckle up. It’s going to be a bumpy ride.