ELK GROVE, CA (MPG) - City Council members received a presentation at their May 27 meeting on the city’s proposed 2026-2027 budget; a $491 million balanced budget $80 million larger than the 2025-2026 budget.

“It is a significant increase over the prior year,” City Manager Jason Behrmann told the council.

Behrmann said most of the increase comes not from operating costs but rather from capital projects and related activity slated for this budget cycle, such as some future projects going into design contracts while others will begin turning dirt.

Some of these projects were detailed during a presentation on the 2026-2030 Capital Improvements Program prior to the budget by Capital Program Division Manager Christina Castro. The city is proposing spending about $450.77 million in capital projects over the next five years with $304.25 million in funding already secured, leaving $146.52 million unsecured.

“This unsecured funding represents project funding needs that are reasonably anticipated to be available from grants, bond financing, or other yet to be identified funding sources in the coming five fiscal years, but which are not currently secured, making the delivery timing uncertain,” Castro wrote in her council report.

The city lists 97 projects in its five-year plan, 74 of which are capital improvement projects, 23 minor projects under $250,000 or studies, 17 new projects added this year, seven completed projects in 2026 and on track to complete another 12 in 2026-2027.

Project funding makes up the difference between the $491 million the city expects to spend in this coming cycle vs. just over $351 million in expected revenue. Of those expenses, the largest is almost $240 million in capital outlays, accounting for 49% of the total expense budget.

“The total proposed budget of approximately $491 million includes not only current-year revenues, but also the planned use of existing fund balances, reserves and other accumulated resources that were collected in prior years,” Elk Grove Budget Manager Nathan Bagwill said in a May 28 email.

Many capital projects are funded over multiple years. That revenue must be recorded in the accounting process as the project moves forward and can sometimes result in annual expenses exceeding revenues until those funds are spent.

Bagwill said the 2026-2027 budget includes capital improvements carried forward from previous years, along with those restricted funds accumulated for specific projects.

“These resources bridge the difference between the approximately $351 million in current-year revenues and the $491 million total expenditure budget,” Bagwill said. “In short, the budget is balanced because expenditures are supported by a combination of current-year revenues and previously accumulated fund balances and reserves that are legally available for their intended purposes.”

During his presentation, Behrmann pointed to the wide variety of funding sources the city utilizes as a strength of the budgeting process. Of the nine sources, Behrmann was proudest of the over $66.5 million in grant funding staff has been able to secure.

The city also expects to see $49.59 million in community facilities districts/assessment districts revenue, $44.12 million from building impact and development fees, $43.87 million in property taxes and $40.37 million in sales tax. Most of the two latter revenue sources go into the city’s General Fund, where $117.4 million of revenue (not including $36 million in Measure E revenue) is matched against almost $107.57 million in expenses, the largest of which is over $72 million in compensation, most of which goes to public safety staff.

The $10.1 million increase in General Fund expenses is driven by a $4.1 million increase from the negotiated 3.5% general salary increase, Police Officers Association market adjustments, step increases, overtime needs and four new positions. The city is also increasing staff and equipment in response to public safety needs, including purchasing several new police vehicles and red-light traffic cameras at five more intersections in response to public safety’s focus on improving traffic enforcement and safety measures.

Behrman also pointed out the city has a healthy $25.8 million reserve fund to address potential economic uncertainties, $5.1 million in an “Opportunity Reserve” and continues to make strong investments in capital reserves, economic development and a pension trust fund that is in the top 10% of trust funds in the state. Behrmann said financial forecasts indicate a stable General Fund with revenues exceeding expenses over the next five years.

“We’re not seeing any major headwinds with our revenue sources,” he said. “If we do, we can adjust, we can adapt and we can ride out any storm.”

The city has until the end of June to adopt the 2026-2027 budget, but staff are proposing this be done at the council’s June 10 meeting. The meeting will also include a public hearing for comment on the budget.

Earlier in the May 27 meeting, City Council and staff honored long-time city employee Kara Reddig, who is leaving her current position of deputy city manager to become the first woman city manager for the city of Lodi. Reddig joined the Elk Grove staff almost 24 years ago and has risen through the ranks to her current position.

City Manager Jason Behrmann pointed to Reddig’s leadership in implementing Measure E, a voter-approved 1% sales tax measure passed in 2022. She has also secured more than $18 million in state and federal funding to support a variety of community needs including enhancing public safety and funding homelessness initiatives.