{"id":2730,"date":"2026-05-20T15:02:28","date_gmt":"2026-05-20T15:02:28","guid":{"rendered":"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/05\/20\/davis-narrows-budget-deficit-but-more-cuts-and-revenue-fixes-are-needed-by-2027\/"},"modified":"2026-05-20T15:02:28","modified_gmt":"2026-05-20T15:02:28","slug":"davis-narrows-budget-deficit-but-more-cuts-and-revenue-fixes-are-needed-by-2027","status":"publish","type":"post","link":"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/05\/20\/davis-narrows-budget-deficit-but-more-cuts-and-revenue-fixes-are-needed-by-2027\/","title":{"rendered":"Davis narrows budget deficit, but more cuts and revenue fixes are needed by 2027"},"content":{"rendered":"<article><!-- --><!-- --><!-- WPS-5038 -- removed the script from WPS and added the placeholder for trinity player --><!-- --><!-- --><!-- --><!-- --><!-- --><!-- --><!-- --><!-- CONTENT --><!--[--><!--[--><\/p>\n<p>Davis made progress toward reducing its biennial budget deficit this year, according to a update presented to the City Council on Tuesday.<\/p>\n<p>Read more <a href=\"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/05\/20\/2-veteran-free-agents-the-49ers-should-sign-instead-of-joey-bosa\/\">2 Veteran Free Agents the 49ers Should Sign Instead of Joey Bosa<\/a><\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>The update marked the first revision to the second year of the city\u2019s first two-year budget, which the council adopted almost a year ago. The proposed spending cuts would narrow the deficit, but the city still faces a projected multiyear budget shortfall. City staff said they would return to the council in February with recommendations to fully balance the budget, which runs through June 2027.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>Davis spent roughly $5 million more than it brought in last year and the city projected a $3 million budget deficit this year. Revenue for the city\u2019s general fund remains about $2 million lower than annual spending.<\/p>\n<p><!--]--><!--[--><\/p>\n<p>City staff proposed cutting about $1.4 million in spending. They limited midyear spending requests, but changes to the 2026-27 budget will absorb most of those savings. The city anticipates about $600,000 in reduced spending next year, a 0.6% reduction.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<div>\n<p><strong>\u00bb\u00a0Davis\/Yolo news in your inbox: <\/strong>Get our free Davis\/Yolo email newsletter here<\/p>\n<\/div>\n<p><!--]--><!--[--><\/p>\n<p>City policy seeks a reserve fund equal to at least 15% of annual spending, but the budget deficit has left the city with only about 9% set aside as of March, according to the report. The revised budget would increase the reserve to about $13.3 million, or 13.7% of city spending. The savings would come from limiting midyear budget requests and delaying some capital projects.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>The city set aside $3 million to repair streets and bike paths, but a growing repaving backlog and other deferred maintenance continue to threaten the city\u2019s fiscal health. Repair costs rise when maintenance is delayed, and the backlog will not fit within the city budget unless Davis generates more revenue, said Councilmember Bapu Vaitla, who represnts the residents west of Highway 113.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>\u201cThere\u2019s no way to \u2018general fund\u2019 our way out of this pavement problem,\u201d he said.<\/p>\n<p><!--]--><!--[--><\/p>\n<p>The city now expects revenue to come in 0.2% lower than projected, or about $200,000.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>City staff lowered their forecast for next year\u2019s sales tax revenue by $500,000. The revision reflected a clearer estimate of revenue from Measure Q, a 1-cent sales tax renewed by voters in 2024. The city has also earned more than expected from investments and property taxes, according to the staff presentation.<\/p>\n<p>Read more <a href=\"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/05\/20\/cardinals-michael-mcgreevy-look-for-continued-success-vs-pirates\/\">Cardinals, Michael McGreevy look for continued success vs. Pirates<\/a><\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>Another factor contributing to lower-than-expected sales tax revenue is reduced consumer spending caused by \u201ceconomic uncertainty and continued hostilities in the Middle East causing sustained increases to gasoline prices and disruption of supply chains,\u201d according to a staff report.<\/p>\n<p><!--]--><!--[--><\/p>\n<p>That slowdown could also reduce revenue from the city\u2019s hotel tax as travel demand sags.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>The city also found cannabis tax revenue declined more than expected. Cannabis tax revenue is now projected to generate $500,000 less than originally forecast next year.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>City staff said they would present a plan in nine months that eliminates the deficit entirely. According to a staff report, the plan would include reorganizing city staff after anticipated retirements.<\/p>\n<p><!--]--><!--[--><\/p>\n<p>As the city has taken steps to reduce spending, it has also approved labor contracts that offset some of those savings, said Dan Carson, a former Davis councilmember and former member of the city\u2019s Finance and Budget Commission.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>\u201cThe first steps to address the city\u2019s budget shortfalls being proposed by city management are reasonable but will fall far short of what is needed to address a severe funding gap,\u201d Carson wrote in a letter to the City Council. Of particular concern to Carson is a sharp increase in payroll spending.<\/p>\n<p><!-- --><!--]--><!--[--><\/p>\n<p>Davis spent about $71 million on employee salaries and benefits in fiscal year 2022-23. It expects to spend about $93 million this year, an increase of roughly 30%. Over the same period, city revenue grew by just 13%.<\/p>\n<p><!--]--><!--[--><\/p>\n<p>\u201cUltimately we\u2019re not going to make our way out of this fiscal situation we are in long-term until we really fix the revenue side of things,\u201d Davis Mayor Donna Neville said. \u201cWe just have to fix it.\u201d<\/p>\n<p>Read more <a href=\"https:\/\/sandiegorelocationnews.com\/index.php\/2026\/05\/20\/young-starters-in-spotlight-as-yankees-and-blue-jays-battle\/\">Young starters in spotlight as Yankees and Blue Jays battle<\/a><\/p>\n<p><!-- --><!--]--><!--]--><!-- --><!-- --><!-- --><!-- --><\/article>\n","protected":false},"excerpt":{"rendered":"<p>Davis reduced its projected budget deficit with spending cuts, but officials said more changes are needed to close a multiyear shortfall by June 2027.<\/p>\n","protected":false},"author":1,"featured_media":2729,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":["post-2730","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-yolo-county-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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