Berkeley Adopts Two-Year Budget Amid $30 Million Annual Shortfall
Berkeley City Council adopted the city’s FY2027-28 biennial budget on June 23, approving a two-year operating plan as officials confront a projected annual general-fund shortfall of approximately $29.2 million to $30 million.
The council also adopted Berkeley’s FY2027-31 five-year capital improvement program during the same action. Together, the decisions set the city’s near-term spending framework and its longer-term plan for infrastructure and other capital projects.
The budget governs city operations and services for the next two fiscal years. The size and recurring nature of the projected general-fund gap means Berkeley will continue balancing ongoing expenses against revenue while carrying out the adopted plan.
A budget shaped by months of debate
The decision followed months of public meetings and City Council deliberation about how to stabilize the city’s finances. The budget process included discussions of cost reductions, service changes and potential staffing impacts.
Proposed responses included layoffs and service reductions, according to reporting during the budget process. Those proposals were part of the debate over how to close the gap. They should not be treated as a complete list of changes enacted by the final budget.
The city also considered revenue measures, including a possible sales-tax increase. That measure was discussed as one potential part of Berkeley’s fiscal response. The council’s June 23 budget adoption does not establish that a sales-tax increase passed or specify a final amount for one.
City fiscal documents put the projected general-fund deficit at about $29.2 million for fiscal year 2026-27, while broader budget reporting described the annual shortfall as nearly $30 million. The figures reflect the central financial challenge addressed during the budget process: a gap between recurring revenues and the costs of maintaining city operations.
What the two plans cover
The biennial budget is the city’s operating plan. It determines how Berkeley will allocate money for city services, staffing and other ongoing government expenses during fiscal years 2026-27 and 2027-28.
The capital improvement program covers a different category of spending. Its five-year horizon provides Berkeley’s planning framework for infrastructure and other long-term capital investments through fiscal year 2030-31.
Adopting the two plans together gives the city a framework for both day-to-day operations and longer-term projects. It also places the general-fund shortfall alongside infrastructure planning, rather than treating the deficit as an isolated budget issue.
What happens next
Berkeley city operations will proceed under the adopted FY2027-28 budget, while the capital improvement program guides planning for projects through FY2027-31. The city’s continuing fiscal response will involve managing the projected recurring gap through the spending plan and any future cost or revenue decisions.
The June 23 vote completed adoption of the two plans. The budget action itself does not resolve the projected annual shortfall, and the possible sales-tax measure remains a separate revenue question rather than an adopted element established by the vote.
Sources
- City Council Special Meeting eAgenda June 23, 2026, City of Berkeley
- Police Accountability Board Meeting Packet, City of Berkeley
- Berkeley layoffs, service cuts to close $30M budget deficit, NBC Bay Area
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