Santa Ana officials are on track to approve next year’s roughly $778 million overall budget – the last big spending plan council members say they’ll adopt before they start tightening the belt as they stare down the barrel of an estimated $30 million budget deficit in four years.
“It is going to be the last big budget that we have before we have to make some really difficult decisions,” said City Councilwoman Thai Viet Phan at Tuesday’s city council meeting about next year’s budget.
That projected deficit could threaten funding for police, fire and ambulance services, park maintenance and library services when Measure X, a 1.5% sales tax measure approved in 2018, starts to sunset in 2029 and the city loses about $30 million in revenue.
This fiscal year, officials are grappling with a roughly $10.5 million deficit as general fund revenues are estimated at $413.79 million while $424.23 million is expected to be spent.
“Approximately $10.5 million of one-time uses were funded using recurring revenues. The proposed budget does not use much recurring revenues for one time spending, and that’s how we were able to propose a balanced budget, even as expenditures outpace revenue,” said Alex Trinidad, Santa Ana’s assistant director of Finance and Management Services, at Tuesday’s meeting.
City staff did not respond to questions Wednesday about where the $10.5 million is coming from exactly.
The general fund is a city’s most flexible pool of money that covers critical quality of life areas like public safety, libraries, parks and various community services.
City staff warn that, if left unchecked, the deficit will widen and could reach around $124 million by the 2034-35 fiscal year.
Previous projections from city staff had the city facing a $35 million deficit in the 2028-29 fiscal year and a $129 million deficit in a decade’s time.
[Read: Santa Ana Scrambles to Narrow an Expected $35 Million Deficit in Four Years]
At Tuesday’s meeting, Santa Ana City Council members unanimously approved the first reading of the 2025-26 fiscal year budget, applauding this year’s budget process as being collaborative and funding diverse priorities from street lighting to more ambulances to bus shelters.
At the same time, city officials said they’d soon be starting to “tighten their belts” amid a bleak 10-year financial outlook.
Mayor Valerie Amezcua said staff is already preparing to address the projected deficit ahead of Measure X sunsetting so future council members are not blindsided and next year they will “buckle down.”
“We see what happens in other cities and school districts that they kind of just, ‘oh, wow, here we are we have no more money, and so we’re going to do our thing,’ and it hurts people. So this council and myself, we’re not looking to do that,” she said at Tuesday’s meeting.
To view the budget, click here.
Tuesday’s meeting comes after trustees on the Santa Ana Unified School Board – which Amezcua served from 2014-2022 – voted last month to begin to layoff over 260 employees as they grapple with declining enrollment and a $154 million budget deficit.
[Read: Santa Ana School District Lays Off 262 Employees]
It also comes as officials in a host of Orange County cities asked voters last November if they wanted to raise sales taxes to help dig them out of multi-million dollar deficits.
In neighboring Orange, voters narrowly rejected an increase, leaving officials in that town to continue to grapple with making cuts and looking for new ways to generate revenue.
[Read: Here’s Where OC Voters Stand on Sales Tax Increases in 2024]
Now, Fullerton officials could ask residents to vote on two separate dedicated sales tax increases as the city faces a $3.9 million budget shortfall.
[Read: Fullerton Considers Sales Tax Increase to Ease Budget Strain]
In Santa Ana, Trinidad said in 2026-27 municipal spending will continue outpacing revenue.
“This is largely driven by inflationary increase in cost increases, including rising labor, contractual and construction costs, as well as growing pension obligations,” he said at Tuesday’s meeting.
“The model does suggest that future adjustments may be necessary to maintain a balanced budget over the long term.”
Santa Ana’s Budget
Santa Ana’s general fund is expected to bring in roughly $413 million in tax revenue next year while spending over $424 million.
The biggest chunk of that money – 38% or roughly $161 million – will be spent on the police department.
The city will be spending over a million on funding for body-worn cameras for police, $900,000 on additional ambulances to shorten response times, $3.5 million on improvements to the Cypress Fire Station and $1.3 million on lights in Centennial Park.
Officials are also spending $250,000 on jail improvements, $250,000 on bus shelter improvements and installations, $40,000 to increase the city council’s travel budget and $1.5 million on road improvements in business areas.
City Councilman Phil Bacerra said the budget includes infrastructure improvements that will help generate economic development.
“We’re going to start to see a drop off pretty soon, and so we need to start looking. I’d rather grow our economy and not look at cuts. Call me old fashioned, but that’s what I’d rather see us do,” he said at the meeting.
“This budget is a great step in that direction.”
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.