Agenda Item Wording:
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Fiscal Year 2026/27 and 2027/28 Proposed Budget - Receive and discuss the proposed 2026/27 and 2027/28 budget.
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Agenda Date: 06/01/2026
Prepared by: Renee Nagel, Finance and Technology Director,559-713-4375, Renee.Nagel@visalia.gov, Amee Swearingen, Budget Analyst, 559-713-4170, Amee.Swearingen@visalia.gov
Department Recommendation: No action is required tonight. This report will present an overview of the proposed fiscal year 2026/27 and 2027/28 budget. Staff will return to Council on June 15th with proposed changes, conduct a public hearing, and potentially adopt the budget.
Summary:
The 2026-2028 Biennial Budget is comprised of all City funds, including the General Fund, Special Revenue Funds, Capital Funds, Enterprise Funds, and Internal Service Funds. The proposed budget appropriation for FY 2026/27 is $409 million and $359 million in FY 2027/28. The budget was developed using a conservative and responsible approach for both revenues and expenditures while meeting the community’s needs and addressing the goals established by the City Council for the next two years.
A detailed summary of the budget assumptions is included in the Budget Message of the document. The budget book can be viewed on the City Webpage at <https://www.visalia.gov/DocumentCenter/View/3095/Proposed-2026-27--2027-28-Budget-Document-PDF> .
Background Discussion:
Every two years the City of Visalia adopts a biannual budget. The Budget lays out a strategic resource allocation plan that aligns with community goals, preferences, and needs. The Budget is a policy document, financial plan, operations guide, and communication device all in one.
The Budget also:
• Determines the quality and quantity of City programs and services.
• States expenditure planned and the resources needed.
• Sets targets and provides a means of measuring accomplishments against goals and actual versus planned outcomes.
• Serves as a communication device-for elected officials, the public, and the City organization-that promotes the City’s vision and direction, fiscal health and vitality, and how the public will benefit from the expenditure of tax dollars.
The budget is a dynamic document that demonstrates to the public our commitment to service, accountability to the residents, and our focus on meaningful work and significant projects. The budget document is comprised of a 2-year operating plan (annual budget), a 6-year capital improvement program (capital budget), and appropriations for debt service and other uses. The development of the operating and capital budgets, however, takes place on two separate timelines (see Table 1 - Budget Process Calendar).
The Capital Improvement Program (CIP) is a multi-year planning instrument that drives the identification, evaluation, and financing of capital infrastructure projects in need of renovation, repair and/or construction. Capital projects consist of all projects that cost more than $10,000 and are typically infrastructure, equipment, and vehicles. Capital projects range from street maintenance or construction to the renovation of municipal buildings, recreation centers and ball fields, to sewerage system replacement, and the purchase of vehicles and equipment. The CIP relates these capital project needs to the financial resources that will support their realization and the timeframe in which both the financing and work will take place. Capital projects typically carry considerable future impact due to having a life span of at least five years or more.
Over the next 2 years, staff is proposing to fund $210.6 million in capital projects. These projects were presented to Council in February, March, April, and May. Tonight, we will begin the budget workshop meetings that will discuss the operating budget. The Operating Budget is used to finance all day-to-day operations and obligations of the City. This budget includes all departmental operations, debt service, small capital expenditures (less than $10,000), and fund transfer payments (advances and subsidies) for the next two fiscal year’s. The funding for the budget is derived from taxes, fees, licenses, fines, and inter-governmental revenues (state and federal grants).
The operating budget starts by creating a baseline budget and building upon that to plan out the next two years. The City uses actual numbers from the prior two years and current year projections as the baseline. Finance creates a set of strategic guidelines to help departments prepare their proposed budgets. The strategic guidelines for this two-year budget are to:
• Budget revenues conservatively
• Seek cost saving measures that produce the same service delivery at a lower cost
• Find ways to address deferred maintenance
• Produce a balanced budget
Due to the complexity of creating the budget, a timeline is created to ensure the budget can be adopted by June 30th as shown in Table 1 - Budget Process Calendar.
Table 1
Budget Process Calendar
Staff recommends that the Council adopt a budget by June 30th to comply with City Charter provisions requiring a budget appropriation for all expenditures. However, if Council is concerned or desires further discussion of the budget, additional hearings could be scheduled. Extending adoption of the budget past June 30th would result in the City having expenditures with no appropriation, in violation of the City Charter. This would be an undesirable outcome and is not recommended by staff.
City Council’s Budget Goals and Priorities
The guiding principles that inspired the recommendations contained in this budget were established by City Council on November 3, 2025. At this meeting, Council set five budget goals and priorities which were used as a framework for budgeting operations and capital projects. Below are the budget’s strategic goals:
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Quality of Life • Maintain quality of life for the citizens of Visalia • Continue City efforts to reduce homelessness while collaborating and advocating regionally as appropriate. • Provide diverse housing through a variety of programs and policies for all income levels • Provide diverse community experiences and personal enrichment for all ages • Continue to improve parks, recreational amenities, open space, and trailways for a connected community. |
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Fiscal Strength • Continue to maintain the City’s good fiscal health and sustainability • Adopt a balanced budget • Continue to maintain the General Fund Emergency Reserve at 30% of operating expenditures. |
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Infrastructure & Growth • Plan for the development of future infrastructure • Maintain, improve, and replace assets and infrastructure within the City • Ensure safe, reliable infrastructure that benefits the community • Seek grant funding to maintain and expand City infrastructure to meet the community's needs • Manage, maintain, and enhance the City’s roadways to provide a safe and effective transportation system |
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Organizational Excellence • Provide excellent public service that is efficient, accessible, and responsive to all • Provide high-quality essential City services • Attract and retain a talented, diverse, and engaged workforce across the entire City organization • Utilize and add technology to increase efficiencies for City services • Continue to make improvements that equip the City to deliver excellent services to the community |
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Economic Vitality • Promote a vibrant economy that provides an equitable opportunity for all • Facilitate programs to develop, attract, and retain businesses • Foster economic development in both commercial and industrial |
This budget is also responsive to community priorities, including addressing the continued service requirements indicated as essential by our public.
Budget Overview
The proposed budget for FY 2026/27 and 2027/28 is comprised of all City funds, including the General Fund, Special Revenue Funds, Capital Funds, Enterprise Funds, and Internal Service Funds. The proposed budget appropriation for FY 2026/27 is $409 million and $359 million in FY 2027/28 as shown in Table 2 - Proposed Appropriation. The decrease in FY 27/28 is due to less capital projects.
Table 2
Proposed Appropriations
The City’s budget includes all allocated positions and assumes no vacancies, as is the usual practice. In the past, vacancy savings have been used to fund emergency, unplanned, or projects that are scheduled in the future years.
The proposed budget includes a total of 737 full-time employees and 278 part-time employees. This count includes the addition of 21 new full-time positions across the organization. In total, 5 full-time positions are proposed within the General Fund, and 16 full-time positions in the Internal Service, Special Revenue, and Enterprise funds. The proposed positions are critical for the implementation of the City Council’s priorities and goals to enhance services and maintain the quality of life for our citizens.
The City’s primary and largest fund is the General Fund which supports general municipal services such as police, fire, parks, recreation services, and general government. The General Fund is not restricted and resources can be used to provide a broad array of public services. This fund is comprised of multiple revenue sources including, but not limited to, taxes (such as property, sales, and lodging taxes, etc.), user fees, fines, and development related fees.
The General Fund proposed budget has an increase in FY 2026/27 of $3.1 million (2.8%) from the current budget and an increase of $0.4 million (.3%) for FY 2027/28. The General Fund proposed budget is balanced and is projected to have a surplus of $2.3 million in FY 2026/27 and $5.6 million in FY 2027/28 as shown in Table 3 - General Fund Budget Summary.
Table 3- General Fund Budget Summary
(Does not include sub funds)
The budget projection includes continued revenue growth in majority of the funds as economic activity in the City continues to increase and new businesses open. While the City is in overall sound financial shape today, we must be cautious in approving expenditures that will impact the City in the long term. Revenue forecasts show continued growth; however, we must recognize that other foreign and domestic factors (i.e. inflation, housing prices, supply chain disruptions, etc.) could negatively impact the growth and expansion of our local economy. Any of these factors could also cause another economic downturn. Staff is optimistic about the financial outlook but we must also continue to be fiscally responsible by having sufficient reserves, balanced budgets, and prudent spending policies.
A detailed summary of the budget assumptions is included in the Budget Message of the document. The budget book can be viewed on the City Webpage at <https://www.visalia.gov/DocumentCenter/View/3095/Proposed-2026-27--2027-28-Budget-Document-PDF> .
Fiscal Impact including annual maintenance and operating costs: None
Prior Council Action: Capital Presentations: February, March, April, May 2026
Alternatives: None
Recommended Motion (and Alternative Motions if expected):
recommendation
None.
Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 06/30/2026
Attachments: None
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Check all that apply.
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☒ Economic Vitality |
☒  Organizational Excellence |
☒ Fiscal Strength |
☒  Infrastructure & Growth |
☒  Quality of Life |