After months of public hearings to address the County’s fiscal challenges amid a projected $40.6 million structural deficit, the County of Monterey has adopted a balanced budget for fiscal year 2026-2027.
At a June 16 Board of Supervisors meeting, supervisors adopted a $2.35 billion budget financed by $2.28 billion in revenues, an increase of $117.2 million, or 5.3 percent, from the prior year. The budget includes a $1 billion general fund supported by $991 million, primarily from local taxes and discretionary revenue.
“I know this was a challenging year with some structural changes that were coming forward,” Supervisor Wendy Root Askew said during the meeting, “and we'll need to continue working together to iron out the wrinkles as we continue to encounter them. But with that, I think we're going to continue being able to invest in our workforce and services that keep Monterey County a place that we all love to call home.”
Despite overall spending increases, the workforce has decreased from 5,811.9 full-time-equivalent employees to 5,700.8 positions, a decline in 111 positions, or two percent.
While discretionary revenues have grown—supported by Measure AA sales tax collections in unincorporated areas, sales tax, transient occupancy tax revenue, and property tax revenue—the growth has not kept pace with rising expenditures. The County Administrator's Office attributes the rising costs to salary increases approved through labor contracts, pension obligations, health insurance and jail medical costs outpacing recurring revenue.
On June 9, the Board of Supervisors voted to place a measure on the November ballot that would raise the transient occupancy tax from 10.5 percent to 12.5 percent, a two-percentage-point increase projected to bring in $7.6 million a year to go into the general fund.
Measure AA, a voter-approved 0.5-percent sales tax in unincorporated areas contributing about $26 million annually, contributes $8.4 million to ongoing operating expenses and $16.6 million for one-time expenditures in the budget.
Measure AA funding supports 23.5 deputy sheriff positions in the Sheriff’s Office, investigator positions in the District Attorney’s Office, public safety services and one-time public safety and capital projects.
Departments submitted about $42.5 million in augmentation requests with roughly $15.9 million left unfunded.
The County prioritized keeping people employed and funding existing services before considering new requests, resulting in requests for upgrades or expansion of programs were denied or deferred.
While the Sheriff’s Office received the largest share of general fund allocations, $4.2 million in requests was left unfunded, including additional Flock cameras and AXON equipment upgrades.
Other needs, such as requests to fix aging infrastructure, technology upgrades and new programs, were also deferred. Among them was $2.8 million for public works, facilities and parks projects including building maintenance, Carmel Lagoon management and vehicle replacement.
While this year’s budget is balanced, the longer-term trend continues to show structural deficits.
H.R. 1, the federal spending bill also known as the “One Big Beautiful Bill,” is expected to have rippling effects from changes to local health care systems and could have large fiscal impacts on the County.
Because the County relies heavily on federal dollars through programs like SNAP, or CalFresh (food stamps), Medi-Cal and emergency preparedness grants, officials are preparing for increases in workload and potential funding reductions.
Medi-Cal has been identified as the largest risk.
“[H.R.1] is projected to cut Medi-Cal benefits for around 30 percent of Monterey County residents who are currently enrolled,” Askew said in a Facebook post. “Once people lose coverage under the new federal rules, they can’t re-enroll. More people without insurance means more emergency room visits, and that drives up costs for everyone.”