Sacramento’s new fiscal year starts with a $1.7 billion budget and a $66.2 million gap behind it

Sacramento’s new fiscal year is operating under an adopted budget, but the practical effects are still being worked out. The City Council approved a roughly $1.7 billion FY2026/27 spending plan in June after closing a $66.2 million structural General Fund deficit.

The fiscal year began July 1, 2026. The city’s budget calendar identifies August and September as the implementation-planning period, when departments work through how the adopted decisions will affect staffing, services, contracts and schedules.

What the council adopted

The council approved the budget on a 7-2 vote. The final balancing package combines several measures rather than relying on one broad reduction: eliminating about 100 vacant positions, increasing selected fees and reducing spending on homelessness programs.

The city says its approved budget is the controlling record for changes made during public hearings. That distinction matters because the spring proposal included options that were changed, rejected or revised before adoption.

Mayor Kevin McCarty’s July memo says about 75% of the adopted solutions are ongoing. That could reduce pressure in future budget cycles, but it does not eliminate the city’s longer-term risks involving operating costs, labor obligations, revenue growth, pensions and capital needs.

Staffing and public safety

The staffing reductions should not be treated as a single block of filled-employee layoffs. The Sacramento Bee reported that roughly 100 eliminated positions were vacant, while the exact number of filled positions affected remained undetermined.

The adopted department-reduction document lists General Fund reductions for both the Fire Department and Police Department. It says $3.6 million of the Fire Department reduction reflects savings from the Single Role Program and states that the change will not reduce service. For Police, the document lists a $9.1 million reduction, including $1.8 million tied to shifting Office of Violence Prevention costs to external grants.

The Sacramento Bee reported that Sacramento is eliminating 62 full-time-equivalent Police Department positions, including the mounted police unit. Nine of those positions were filled sworn positions, with the affected employees expected to be moved within the department. The newspaper also reported a $253 million total Police Department budget for FY2026/27, while the city’s department-reduction document lists a $246.5 million net General Fund budget figure. Those figures use different budget measures and should not be treated as interchangeable.

For residents, the immediate questions are which vacancies disappear, how filled employees are reassigned, whether overtime changes and whether departments publish any service or coverage adjustments during implementation.

Homelessness spending is lower, with results still pending

The adopted balancing plan reduces Community Response spending while the city restructures contracts and relies on different funding sources. The city’s budget information shows total Department of Community Response program funding falling from $48.2 million in FY2025/26 to $39.421 million in the FY2026/27 proposed budget figures listed in the document. General Fund support falls from $35.304 million to $33.624 million.

The same city document says state homelessness grant funding has declined and that the department has relied more heavily on the General Fund. It lists changes across shelter, outreach, cleanup, coordinated access and other programs, including the loss of some prior grant-supported funding and new or revised program allocations.

The department-reduction document says the $6 million Community Response reduction is tied to contract and program efficiencies and that the level of homeless services will not be reduced. The mayor’s memo goes further, saying the reforms are intended to make the response more cost-effective and serve more people. That is the administration’s stated goal, not a measured outcome yet.

Residents should watch for contract changes, shelter and outreach updates, participation figures and future reports showing whether the city’s service capacity matches those assurances.

Programs restored or protected

The mayor’s July memo says the final plan restored $4.5 million for selected priorities, including wading pools, youth programs, violence-prevention programs and senior services.

The memo describes those priorities as protected or restored, but the exact schedules and operating details still depend on department implementation. The city’s wading-pool analysis says the four pools could operate three days a week for $60,952, while full closure would save $117,520. It also reports 8,188 citywide wading-pool visits during summer 2025. Those figures describe budget scenarios, not a final 2026 operating schedule.

For families, older adults and people who rely on violence-prevention programs, the next useful information will be department notices identifying which programs remain open, their hours, eligibility rules and service locations.

Fees and the next checkpoints

Selected fee increases are part of the adopted balancing package. The draft proposal should not be used to assume a final amount or effective date. Residents and businesses should rely on department-issued fee schedules, notices and implementation updates for the charges that apply to them.

The city’s immediate budget checkpoints are department implementation announcements, staffing updates, service schedules and fee notices. The city budget calendar also identifies later stages for fiscal review, including midyear forecasting and updates to the City Council.

The adopted plan closes the current structural gap for FY2026/27. It does not erase the pressures that produced the deficit. For Sacramento residents, workers, businesses and taxpayers, the central question now is how the approved trade-offs appear in city services, staffing decisions and bills over the next year.

Sources

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