The Palm Springs City Council narrowly passed its biennial budget for fiscal years 2025-2026, boosting annual economic development funding by $500,000 despite concerns about economic uncertainty. The 3-2 vote saw Mayor Ron deHarte and Councilmember David Ready opposing the budget, citing worries about revenue projections. Finance Director Kristopher Mooney highlighted potential revenue from new businesses like Chick-fil-A and In-N-Out, estimating $400,000 to $500,000 in annual sales tax. The budget also prioritizes infrastructure projects, affordable housing, and pension liabilities while shifting funds to balance priorities. Revenue projections indicate $173.1 million for 2026 and $175.2 million for 2027, relying heavily on taxes from tourism, property, and sales. Public concerns were raised about sustainability, but supporters emphasized flexibility for future adjustments.
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Palm Springs City Council narrowly approves biennial budget, boosts economic development funding ⋆ The Palm Springs Post
The Palm Springs City Council approved the city’s comprehensive budget for fiscal years 2025-2026 Wednesday night while increasing economic development funding by $500,000 annually amid concerns about uncertain economic conditions. n nThe council voted 3-2 to adopt the biennial budget, with Mayor Ron deHarte and Councilmember David Ready voting against it. n n“I remain concerned about our revenue projections,” deHarte said during deliberations. “Without preparing for lower revenue now and saying we’ll wait until mid-year to make adjustments, it’s inviting challenges for us in three months, six months that are potentially greater than where we are today.” n nThe approved budget includes significant investments in economic development as the city anticipates new revenue from incoming businesses. Finance Director Kristopher Mooney told the council that new restaurants including Chick-fil-A and In-N-Out could generate between $400,000 to $500,000 in combined annual sales tax revenue. n nThe budget maintains the city’s financial reserves while funding major infrastructure projects through Measure J sales tax revenue. The council moved several major projects from the general fund to Measure J to balance competing priorities while preserving core city services. n nThe budget includes funding for the city’s navigation center, affordable housing initiatives, and a $1 million contribution to the CalPERS retirement system to reduce unfunded pension liabilities. n nMooney presented revenue projections of $173.1 million for fiscal year 2026, with modest growth to $175.2 million in 2027. The budget relies heavily on transient occupancy tax at $49 million, property taxes at $38 million, and sales tax just under $30 million. n nIn a major budget restructuring, the council moved $5.2 million in deferred maintenance projects and vehicle purchases from the general fund to Measure J sales tax revenue in fiscal year 2026. The council also shifted six public safety personnel positions to safety augmentation funds, providing $1.9 million in relief to the general fund. n nThe city also expects substantial revenue from planned fulfillment centers and warehouses in northern Palm Springs. According to city staff, developers estimate one planned 700,000-square-foot fulfillment center could generate $7.6 million in local sales tax revenue annually, or $1.5 million if the building becomes a warehouse. n nThe additional economic development funding will come from cuts to contractual services totaling $400,000 in fiscal year 2026 and $350,000 in fiscal year 2027, plus moving a $500,000 electrical grid project to Measure J funding. n nPublic speakers raised concerns about the budget’s sustainability. n nResident Philip Hodges, who works in institutional finance, warned that the city faces a structural deficit where expenses are growing faster than revenues. “Your own forecasts say that expenses are growing faster than revenues and will continue to do so unless you intervene,” Hodges told the council. n nFormer Councilmember Ginny Foat added, “Our economy is facing a very uncertain future. We are looking at how we used to be and not looking at what our future looks like right now, which is not good.” n nCouncilmembers who supported the budget said it reflects the city’s priorities for economic development and infrastructure investment — and can be adjusted as conditions evolve. n nCity Manager Scott Stiles assured the council that staff will provide quarterly financial updates throughout the two-year period. “We’re entering an uncertain time, and I know how important it is for all of us to closely watch revenues and expenses,” he said. n nThe budget takes effect July 1, with the first quarterly review expected in the fall.
— news from The Palm Springs Post