From reducing operational costs to freezing unfilled positions and cutting funding for community events, the City of Monterey is considering numerous strategies to remedy the next fiscal year's estimated structural deficit.
Those and other options were presented to the Monterey City Council at an informational meeting on Wednesday, April 29, where new City Manager Dante Hall kicked off the presentation.
“It’s no secret, we’re entering into our next budget year facing a significant structural deficit,” said Hall at the meeting. “The image that popped into my mind was a bridge, if you can imagine—a bridge that has some significant cracks. And those cracks developed over time. It’s still standing but not for long if we don’t act.”
Some of the drivers of the structural deficit presented include rapidly rising personnel costs, insurance premium increases and higher utility and pension costs, among others. Balancing the current budget, Hall said, was like an emergency repair to the bridge that “keeps it safe but not for long.”
The emergency repair proposed by city staff includes a 10% reduction in operational costs and freezing 30 unfilled positions, following an assessment of departments, including the assistant fire chief, three firefighters, a harbor security worker, a homeless navigator, two police officers, a custodian, a street maintenance worker and others. By freezing the vacant positions, city staff estimates an approximate savings of $4.6 million in total.
“We are proposing not to cut those positions yet,” says Hall. “We are proposing not to fund those positions for this year, giving us the opportunity of really drilling down and identifying how we live within our means, and how we restructure our organization to be able to be resilient.”
Hall said that the projected revenue for the city in fiscal year 2026-2027 is about $114,260,000 and the projected expenses are about $125,900,000, leaving a deficit of roughly $11.6 million. The savings from the proposed strategies would equate to about $12.6 million.
“That closes the gap for next year with a little bit of room,” said Hall, who pointed out that the proposed strategy does not touch the city’s reserves.
City staff also proposed cutting $125,000 in the next fiscal year from the city’s rental assistance program—funding for community events, such as a $35,000 decrease in funding to First Night Monterey—alongside cutting all funding to the city’s Special Event Support Program, which received $50,000 in the 2025-2026 budget.
After discussion and questions from council members about the budget reduction strategies, Hall said that the upcoming budget will be addressed at the governing body’s meeting on Tuesday, June 2.