Hermosa Beach Balances Budget as Sales-Tax Measure Advances

Hermosa Beach adopted a balanced FY 2026-27 budget after closing a projected $3.2 million structural deficit, but the plan relies heavily on reductions, delayed spending and a paused reserve contribution. The City Council later approved a one-half-cent sales-tax measure for the November 3, 2026, election, leaving voters to decide whether the tax will take effect.

The budget was adopted June 23 and publicly announced June 29. City documents say approximately $4.5 million in reductions and deferred commitments were used to close the gap.

How the city closed the gap

The largest item was about $2.1 million in deferred vehicle purchases. The budget also pauses roughly $1.1 million in annual contributions to the city’s rainy-day reserve.

Approximately $1.3 million came from departmental reductions. The city says that package includes eliminating two full-time positions and several part-time positions, downgrading one full-time position, ending consultant contracts and adopting operational efficiencies.

Those choices help balance the coming fiscal year, but they are not all permanent recurring savings. Delaying fleet replacement shifts costs into later years, while suspending reserve contributions leaves less new money available for future emergencies or downturns.

Service contracts and infrastructure remain pressure points

Hermosa Beach’s budget message identifies rising labor costs, pension obligations, inflation and contract services as continuing pressures. Los Angeles County contract costs are also expected to increase for fire protection, lifeguard services and beach maintenance.

The city’s long-term needs include streets, sidewalks, the City Yard and rehabilitation work at the Pier. The budget documents identify those needs as unfunded or underfunded, but they do not say that every project will be canceled or delayed under the adopted plan.

For residents, the practical questions are likely to involve staffing capacity, the timing of vehicle replacements, the pace of infrastructure planning and whether the city can rebuild its reserve contribution in a future budget.

Sales-tax measure advances toward voters

Earlier revenue discussions focused on several possible ways to address the city’s structural imbalance, including sales taxes, hotel taxes, parking changes, short-term-rental compliance and fees. Hermosa Review reported that the council initially sought policy direction for further analysis rather than making immediate financial commitments.

That status changed at the council’s July 28 meeting. According to the city’s July 30 meeting recap, the council voted 4-1 to approve a one-half-cent sales-tax measure for the November 3 election. The ballot language includes a citizen oversight committee provision, and the council designated members to file arguments in favor.

The action advances the measure through the election process but does not guarantee voter approval. If enacted, the measure would create a locally controlled revenue source. The city’s budget message notes that Hermosa Beach relies substantially on tourism, visitor activity and consumer spending, making local sales activity an important part of its revenue picture.

What to watch next

Residents should watch the final election materials, arguments and voter information for the sales-tax measure. They should also watch future city budget updates for evidence of whether the current reductions become recurring savings, whether reserve contributions resume and how the city addresses its vehicle and infrastructure backlog.

The adopted budget solves Hermosa Beach’s immediate FY 2026-27 deficit. It does not eliminate the longer-term gap between ongoing revenues and the cost of maintaining city services and public assets.

Sources

• City of Hermosa Beach: FY 2026-27 Budget Adoption Announcement
• City of Hermosa Beach: City Manager’s FY 2026-27 Budget Message
• Hermosa Review: City Lays Out Its Revenue Options