The Sacramento City Council on Tuesday night adopted a $1.7 billion budget for Fiscal Year 2025/26, successfully closing a $62.2 million deficit without laying off any City employees.
The approved budget supports programs and services for the city’s 500,000 residents and funds a workforce of approximately 5,000 employees. It prioritizes core municipal services while advancing the Council’s key focus areas: homelessness, public safety, and infrastructure.
“Balancing this budget required difficult decisions, but I am proud we were able to preserve funding for our core services: public safety, parks, and youth,” said Mayor Kevin McCarty. “Long term financial stability for Sacramento will require us to increase our revenue by growing our economy through projects like the Railyards.”
The City relied on a blend of ongoing and one-time measures to close the gap, including savings from prior years, targeted reductions, and increased revenues.
Although the FY2026/27 deficit was initially projected at nearly $100 million, city officials now anticipate a $60 million gap — with further improvements possible pending continued state homelessness funding.
“This budget reflects our commitment to our residents and to the people who make Sacramento run, our employees,” said Interim City Manager Leyne Milstein. “Thanks to thoughtful planning and strong collaboration across departments, City Council, and the Mayor, we’ve closed a significant gap without layoffs, as we continue to work toward long-term financial stability.”
Looking ahead, budget planning for FY2026/27 is expected to begin this fall. The City will review vacant positions and again aim to minimize service and staffing impacts as part of its ongoing fiscal strategy.
