Proposed budget looks to stabilize City finances

The Berkeley City Manager has proposed a range of cost-cutting measures to stabilize the City’s fiscal path – a budget plan that you can learn and give comments about at a series of meetings through June.  

The goal of this plan is to align revenues and expenses to stabilize a long-term structural budget deficit without relying on one-time fixes. 

This proposed budget, which was developed in collaboration with all department directors, includes proposed layoffs of 38 filled positions as well as eliminating 100 vacant positions among the approximately 1,600 current City employees. It also includes reductions in a variety of programs.   

The plan also delays additional staffing cuts until voters weigh in on a City-specific 0.5% sales tax on the November 2026 ballot. 

Passage of the measure, which the City Council has directed staff to draft for the November ballot, would provide the City with an estimated $9 million in general fund revenues annually. The plan proposes to use these funds to minimize position reductions in the Police, Fire, and Parks, Recreation & Waterfront departments. 

“These cuts are painful, and the goal of the proposed plan is to guide the City towards a sound, smart, and stable path,” said Paul Buddenhagen, Berkeley’s City Manager since September 2024. “Regularly using one-time fixes destabilizes the organization and erodes the City’s ability to better adapt to the needs of our community.”

You can read the full plan or watch the City Manager’s presentation to the City Council’s Budget & Finance Committee this Thursday, April 16.

Passage of sales tax would limit cuts

The City Council on March 17, 2026, directed staff to draft proposed language for a .5% sales tax on the November ballot to create a consistent general fund revenue source. This source could be used for police, fire, and recreation services. 

The sales tax in Berkeley currently stands at 10.25%, of which 1% currently goes to the City. The proposed increase would align Berkeley with other cities in Alameda County. The cities of Alameda, Albany, Oakland, Hayward, Newark, San Leandro, and Union City currently have a sales tax of 10.75%. Emeryville has a 10.5% sales tax.  

Should the measure fail to get a majority approval, deeper cuts would be required. 

Structural deficit in City funding sources

The proposed budget aims to address a structural deficit in the City’s General Fund, the City’s primary operational fund and a source that is not legally restricted to specific purposes. 

In addition, a variety of other funds are also facing fiscal shortfalls, including the Marina Fund, Parking Funds, Building Maintenance Fund, Mental Health and Behavioral Health Services special funds, and the Capital Improvement Fund. 

All departments currently receive General Fund revenues. However, the fund has a significant structural deficit. Reasons for that deficit include:

• Increases through inflation and other factors for contracts, utilities, supplies, materials, and insurance
• Increased costs for employee pensions, health care, and staffing
• State and Federal imposed revenue limitations
• Delayed facility maintenance and growing unfunded liabilities attributed to aging infrastructure
• Programs supported by one-time funds
• Historical use of one-time revenue for long-term expenses

Each department under the City Manager provided 10% and 12.5% cuts. In addition to the 138 vacant and filled positions proposed for removal in this year’s budget proposal, an additional 45 vacant positions were eliminated as part of the budget cycle that closed last year on June 30, 2025.

The Mayor and Council, Office of the Director of Police Accountability, and City Auditor also put forward plans to reduce their own budgets.

Budget meetings through June

The proposed budget will be discussed at a series of meetings involving the City Council’s Budget and Finance Committee, which has three members, as well as before the full 9-member City Council. 

Council committee agendas are typically posted at least two days before the meeting. Agendas for full City Council meetings are posted 12 days in advance. 

City Council Budget and Finance Committee meetings:

• April 16, 2026 
• April 23, 2026
• May 14, 2026

Full City Council Meetings:

• May 19, 2026: First hearing to discuss City Manager’s Proposed Budget
• June 16, 2026: Potential Discussion on Revised Biennial Budget
• June 23, 2026: City Council adopts Biennial Budget

“This budget plan lays the foundation for a more sustainable future for the City,” said Buddenhagen. “Despite the difficulties this process will pose in the short-term, we will continue to provide this community with outstanding service. I am grateful for leadership of our City Council and the strength and dedication of our staff in making that happen.”

Links

• April 16, 2026 Budget and Finance Committee Meeting: Agenda & Budget plan