Soledad City Council approves 2026-2027 fiscal year budget amid rising costs, relying on Measure Y.

The Soledad City Council voted 5-0 on Wednesday, Aug. 19, to approve the City’s 2026–27 fiscal year budget, adopting an almost $57 million spending plan that leans on reserves and emphasizing the City’s growing dependence on voter-approved sales tax Measure Y.

Measure Y is a 1-percent temporary emergency sales tax in the City placed on the June 2012 ballot and has been in effect since October 2012. It generates about 15 percent of the City’s revenue and provides funding to protect and maintain local services, including neighborhood police patrols, 911 emergency response times and park infrastructure.

Assistant City Manager Mike Howard warned that if Measure Y is not extended before its 2032 expiration, and no cuts or replacements are made, the City’s finances would become “not sustainable.”

“We need to make sure that we completely understand how devastating that will be to the City,” Howard said during the City Council meeting.

Measure S, a separate local tax supporting parks, recreation and animal control, also remains critical. While Measure S brings in about $1.2 million, the City is still subsidizing related departments with roughly $730,000 in additional general fund support, according to Howard.

He also noted that while the City had maintained “status quo” budgets in the last two years, this year’s plan reflects significant strain.

“Budget pressures are increasing faster than our long-term revenues, so our expenses are increasing at a higher rate than our expenses within our revenues,” Howard added. 

Uncontrollable cost increases—including Cal Fire contract obligations, 911 dispatch fees, escalating insurance premiums and employee health care—forced the City to freeze vacant positions and cut professional services and training, according to Howard.

Among the positions frozen but not eliminated for 2026–27 are an IT manager, community engagement coordinator, recreation program coordinator, a community service officer, a police officer, and various part-time and seasonal roles.

"Losing or freezing one position right now for the code enforcement isn't going to hurt,” said Soledad Police Chief Jorge Arreola. “It's just we have to figure out how to wear multiple hats now and have our officers kind of step up.”

Arreola added that the Police Department is working with the city manager and assistant city manager to look at options in the future to fund the officer.

The City’s general fund is projected to bring in nearly $16 million in revenue, while expenditures total about $16.4 million. The City will plug the $444,000 gap by drawing on operating reserves.

Despite the deficit, the City will maintain its $2 million council reserve and expects to end 2026–27 with about $3.8 million in operating reserves if projections hold.

“This gives us a runway to figure out what to do before we have to do anything dramatic,” Howard said. “The budget is balanced only because of those reserves.”

The City’s enterprise funds—water, wastewater, solid waste and sanitation—remain structurally separate and paid by ratepayers. Water revenues are projected at about $5.2 million, with significant ongoing capital work ahead. The wastewater fund, carrying about $21 million in state loan debt is tight, maintaining only a narrow margin above the required debt service ratio, according to Howard.

Howard noted that state auditors have already asked the City to document compliance with its wastewater debt covenants—evidence, he argued, that careful monitoring has been justified.