SAN PABLO, Calif. — At its June 15 meeting, the San Pablo City Council adopted a balanced biennial operating budget for fiscal years 2026-27 and 2027-28, successfully closing a projected $4.4 million deficit.
To bridge the gap, City staff used a ‘Fiscal Discipline’ strategy that combined $2.4 million in internal cost reductions with $2 million from one-time operating reserves. The approach successfully avoided employee layoffs.
“Our priority was protecting everyday City services while maintaining financial stability,” said Mayor Elizabeth Pabon-Alvarado. “By reducing internal operating costs, we balanced the budget with use of one-time operating reserves and zero employee layoffs which kept our workforce intact to serve the community.”
The City’s structural deficit stems not only from the rising cost of inflation, but also from rising fixed operations costs, including pension obligations, retiree healthcare and insurance premiums. Meanwhile, revenue from Casino San Pablo, which generates approximately 59% of the City’s General Fund revenue, is plateauing. Compounding these challenges, the Measure S sales tax rate will decrease from 0.50 to 0.25 cents on Oct. 1, 2027, cutting annual General Fund revenue by another $1 million.
To offset these losses, San Pablo has secured new cannabis revenues, consolidated IT expenses and reduced nonessential contracts. These adjustments allowed the City to shield core operations and prevent layoffs. Essential daily services such as police, streets, parks, public works and senior programs will currently remain unchanged.
However, the City did make select reductions to community programs. The Teen Lounge has gone from five days a week to four, summer camp was shortened from nine to eight weeks, and some part-time hours will be trimmed. The budget for the Beacon Schools contract services was also scaled back, a move partially driven by $42.4 million in funding cutbacks from West Contra Costa Unified School District as part of their fiscal solvency plan.
City officials noted that operating reserves are a one-time fix. Moving forward, the City must secure new revenue sources or identify further cost reductions to protect its long-term core operations.
“Using reserves gives us the stability we need right now, but it is a short-term solution to a long-term challenge,” City Manager Matt Rodriguez said. “We must remain proactive and diligent in finding new, sustainable revenue sources so we can continue protecting the core services our residents rely on every day.”
For more information or to read the budget document, visit www.SanPabloCA.gov/BudgetUpdate.
