Martinez, CA – On Wednesday, June 25th, the Martinez City Council adopted a fiscally responsible and balanced budget for Fiscal Year 2025-26 in the face of an ongoing structural deficit and stagnant revenues. This budget will not require changes to the City’s core services, preserves essential staff positions responsible for delivering these services, and protects its financial position as it enters an economically challenging period. This budget will go into effect July 1, 2025.
The City of Martinez is faced with struggles like many other California cities, such as revenue loss, rising costs for services, and closure of one-time American Rescue Plan Act funds. The City also must contend with rising costs driven by higher insurance premiums, labor expenses with a growing workforce, facility maintenance costs, and persistent losses at the marina.
Deviating from its traditional biennial budget practice, the City’s move to adopt a one-year budget allows for greater flexibility in a challenging and uncertain economic environment amid a forecasted period of structural deficits. Completing and balancing this budget required staff participation at every level to analyze and justify every dollar proposed to be spent.
City Manager Michael Chandler summarized the City’s 2025-26 Budget as follows: “Providing a balanced budget for FY 2025-26 was exceptionally challenging due to the high degree of economic uncertainty at the federal, state, and local levels in the midst of various escalating costs. Reductions of over $1.5 million within department budgets helped achieve this result, and we are fortunate to have such strong reserves, built up over many years of fiscal prudence, to provide us with the space we will need to weather the current financial headwinds we face.”
The total amount of General Fund budget reductions in the coming fiscal year total $1,521,735, including cuts across all City departments. Notably, however, these cuts will not impact staffing levels or close any current community services. While the City continues to face a structural deficit situation, where ongoing expenses are projected to outpace recurring revenues over time, these reductions, along with a one-time transfer from a special revenue fund, have allowed the City to close the budget gap for the coming fiscal year.
Key resolutions adopted with the budget include:
- Approval of an additional $560,000 loan to cover operational deficits and debt service obligations in the Marina Enterprise Fund.
- Establishment of a Gann Appropriations Limit for FY 2025-26.
- Approval of the City-Wide Salary Schedule for the upcoming fiscal year.
- One-time transfer of $218,000 from the Public Safety Grants special revenue fund to the General Fund.
- Amendment to the Capital Improvement Program to reflect a reduction in General Fund contributions from $425,000 to $375,000.
Planning in a Period of Structural Deficits
As part of the budgeting process, the City undertook a Long-Range Financial Forecast to analyze multiple short- and long-term scenarios that the City may face in the coming years. The Forecast also projected the status of the City’s reserves over the next ten years.
In all scenarios presented by the Forecast, the need for an increase in revenues was emphasized. The Forecast also highlighted the strain associated with ongoing operating deficits at the Marina. The new additional loan of $560,000 brings the total projected loan to the Marina Enterprise Fund to $1,051,902 by the end of FY 2025-26, and projected additional loans are estimated at $650,000 each year thereafter.
These loans to the Marina Enterprise Fund, along with rising costs associated with insurance premiums, staffing costs, and other facility maintenance costs, bring the overall five-year financial projection to a structural deficit averaging $1.2 million annually through FY 2030, increasing potentially to $1.3 million annually through FY 2035. This outlook underscores the need for proactive fiscal strategies in the years ahead.
In conjunction with budget planning, the City Council also developed a Four-Year Strategic Plan to guide priorities and resource allocation. During the Strategic Plan process, five overarching Council goals were developed:
- Financial Sustainability
- Vibrant and Sustainable Waterfront and Marina
- Economic Development and Housing
- Capital Projects and Infrastructure Improvements
- Community Health, Safety, and Well-being
- Adoption of the Strategic Plan is anticipated in September 2025, providing a framework for long-term policy and investment decisions.
Adoption of this Balanced Budget
In the many City Council meetings and Budget workshops this year, the importance of maintaining core services while looking for opportunities to improve the community’s quality of life and long-term future was stressed. In adopting the FY 2025-26 Budget, the Mayor and City Council reaffirmed their commitment to these priorities and seeking solutions for long-term fiscal stability.
For more information on the City’s FY 2025-26 Budget and associated actions, please visit: FY 2025-26 Annual Budget
(https://city-martinez-ca-budget-book.cleargov.com/20691/preface/preface).
