Santa Rosa city finance officials on Tuesday presented a stark picture of the city’s fiscal health: a projected $17.5 million general fund deficit for the 2026–2027 fiscal year, with the structural imbalance expected to grow to $33.6 million by 2029–2030 if left unaddressed.
The figures emerged from an April 22 City Council study session, part of the annual budget preparation process. The general fund, which covers core city services including police, fire, parks, and administration, is projected to bring in $225.5 million in revenues while spending $243 million — a gap of roughly 7 percent.
Interim City Manager Lori Ann Farrell, who took over the role in January, is leading the effort to close the gap. The city has already eliminated approximately 50 vacant and filled positions since the start of the year and is reducing its vehicle fleet to cut operating and maintenance costs.
For the coming fiscal year, finance officials have identified $4.8 million in savings from paying down pension debt and financing fire apparatus purchases differently. The city also plans to draw $8.4 million from reserves to bridge the remaining shortfall — a one-time measure that officials acknowledge does not solve the underlying structural problem.
On the revenue side, property taxes are projected to grow from $41.4 million to $43.5 million, a 5.1 percent increase. Sales tax — which makes up about one-third of general fund revenues — is expected to edge up just 1.4 percent, from $70.5 million to $71.5 million.
A city-commissioned poll conducted earlier this year found qualified support among residents for renewing and potentially expanding the city’s general sales tax. Doubling the current half-cent rate to a full cent could generate an estimated $46 million annually, though any ballot measure remains under council deliberation.
The budget process continues with a two-day workshop scheduled for May 5 and 6, when Farrell and department heads will present proposed budgets for the coming year. The council typically adopts a final budget in mid-June.
Residents can review budget documents and track the process at the city’s budget information portal at srcity.org.
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