Balancing Act
Nice work, City Council, for starters
By Jeff Harris
August 2026
Balanced budgets deserve recognition. The City Council closed a $66 million deficit this summer but weakened its economic safety net in the process.
City Manager Maraskeshia Smith, Finance Director Pete Coletto and councilmembers deserve credit for making tough decisions that produced meaningful efficiencies.
Consolidating departments, streamlining operations and reducing long-term homelessness expenditures are structural changes taxpayers should expect. Those savings aren’t temporary. They improve the city’s financial position for years to come.
The budget eliminates about 101 positions and increases fees for many services.
Unfortunately, balancing the budget is not the same as solving the city’s fiscal problems.
The budget balancing act relies on drawing down the city’s economic uncertainty reserve, leaving us with less protection against risks that trouble the finance director.
As Coletto told City Council members, “The biggest one right now, the one that is causing me the most concern, is just the economic uncertainty and the risk of recession.
“We’re seeing another bout of inflation, we’re seeing higher energy costs, and these things can ripple through the economy. Inflationary environments are very hard for California cities. Our costs go up and some of our main revenue sources flatline or decline.”
The economic uncertainty reserve exists to protect services when the economy falters. It shouldn’t become a tool to balance the budget.
In 2016, the city set a reserve goal equal to 17% of general fund expenditures. I supported that target while on City Council. It represented roughly two months of operating expenses.
The city never achieved that goal. Reserves peaked at about 10.2%.
Today, the fund is below its 10% minimum—the wrong direction when the finance director warns of inflationary pressures and recession.
I’ve written about several ways to produce substantial long-term savings. Whether the council agrees with every recommendation isn’t the point.
Here’s the point: structural deficits need structural solutions.
Among the ideas are removing Measure L, the Children’s Fund, from the charter so those dollars can be unlocked and used in the budget process. Another idea is removing the charter provision that requires binding arbitration for public safety labor negotiations. This would restore the City Council’s authority to make agreements with police and fire employees.
Other ideas include managed competition, which allows public and private providers to compete to deliver services. Many California cities find competition reduces costs and keeps services high.
These proposals aren’t politically easy. But neither are service reductions, layoffs or depleted reserves in the next recession.
The City Council proved it can make difficult budget decisions. Now it must demonstrate the willingness to make the structural changes that permanently align expenditures with revenues.
The council and staff deserve recognition for this year’s cost-cutting. But the work is far from finished. Deficits are projected for the next four years.
The council must become bolder and accept the political risks that come with reform.
Building a city that can weather the next storm—that’s leadership.
Jeff Harris represented District 3 on City Council from 2014 to 2022. He can be reached at cadence5371@gmail.com. Follow us on Facebook and Instagram: @insidesacramento.
