Fullerton’s Fiscal Sustainability Ad Hoc Committee was supposed to help the city confront an immediate budget crisis. Instead, the committee’s majority rejected tax options, declined to identify the cuts needed to close the city’s projected deficit, and voted to recommend exploring the sale of a long-term water system proposal that staff repeatedly warned would not align with the current budget timeline.

Fullerton has to adopt a budget in June. Staff’s budget presentation showed a projected $13.7 million operating deficit for Fiscal Year 2026-27. Without action, the city’s available General Fund balance is projected to fall from about $16.07 million to only $2.31 million by the end of the fiscal year. That means the city needs to make decisions now. There are only a few real options in that situation: raise recurring revenue, make major cuts, use temporary bridge measures, or some combination of all three. But the committee majority chose a fourth path: delay.

The meeting focused on local funding sources, including potential sales tax options. This version of the ad hoc committee was not a standing committee with unlimited authority to debate every possible long-term fiscal reform. Deputy City Manager Daisy Perez made that point directly during the meeting, explaining that the committee had been reconvened for a specific purpose: to gather input on sales tax measures.

Several committee members wanted to use the process to advance broader long-term ideas, including selling or restructuring the city’s water system and potentially selling off the Fullerton Airport. None of these ideas is an answer to the budget crisis the city is now facing.

Committee Member Erik Wehn made clear that he opposed a general sales tax. He argued that residents are already struggling with the cost of living and that even a small additional burden could push vulnerable residents closer to financial crisis.

Staff’s own budget scenario showed that Fullerton could technically balance the budget with a 10% reduction in expenditures. Under “Scenario 3,” the city would make about $15.36 million in additional budget reductions in FY 2026-27, eliminate the projected transfer to the Infrastructure Fund, and end the year with a projected $1.59 million increase to reserves. So the question is not whether a cuts-only path exists on paper.

The question is whether the committee majority is willing to own what that path means. Staff’s 10% reduction scenario warned of “significant long-term operational, staffing, and organizational impacts citywide.” Potential impacts included significant frontline staffing reductions, reduced service availability across multiple departments, reduced proactive programs, reduced maintenance and inspection capacity, and reduced customer-facing support.

The public safety impacts were even more severe. Staff identified the potential closure of up to two fire stations or the elimination of approximately 24 firefighter positions. The scenario also included the potential elimination of 14 sworn police officers, including School Resource Officers, the closure of the jail, the elimination of PD Community Services, increased emergency response times, and slower responses to neighborhood concerns and quality-of-life issues.

The infrastructure impacts were also serious. Staff warned of delayed or deferred street and capital improvement projects, ongoing pressure on infrastructure funding, and increased risk of not meeting Measure M2 Maintenance of Effort requirements, potentially risking millions of dollars in existing street funding.

That is the tradeoff. A 10% cut can improve the spreadsheet. But it does so by reducing the city’s ability to provide services, maintain infrastructure, respond to emergencies, and support basic operations.

The committee majority did not recommend the general tax, but it also did not clearly recommend the 10% cut package staff showed would be necessary to avoid one. Instead, it recommended exploring a long-term water system proposal that would not solve the budget issue due in June. That is not fiscal sustainability. It refuses to choose between the actual options on the table.

Wehn’s preferred alternative was to explore selling or restructuring Fullerton’s water system. He argued that a private operator could potentially provide low-income discounts, retain current water employees, pay property taxes, and pay a franchise fee to the city. He estimated the system could potentially sell for around $200 million, though he acknowledged that number was only his guess.

There are several problems with treating that as a budget recommendation. First, a water-system sale or franchise arrangement would require substantial analysis. Wehn himself acknowledged there would be off-ramps and that the proposal would likely need to go to voters. That means it cannot solve a budget due in June.

Second, the recurring revenue argument is incomplete. Wehn argued that the city could charge a franchise fee to generate ongoing revenue. But a franchise fee is not free money. If a private water operator pays the city a franchise fee, the key question is whether that cost would be passed through to ratepayers. If it is recovered through water bills, then the proposal functions like a tax on an essential utility. It does not avoid the need to ask residents to pay more. It simply moves the burden to the water bill.

Third, if the city requires a buyer to pay roughly $200 million, retain all employees, provide low-income discounts, pay property taxes, maintain service levels, and pay a franchise fee, the public deserves to know how the buyer would recover those costs. That does not mean the idea can never be studied. But it does mean the idea should not be treated as a substitute for a real budget plan.

Committee Member Tony Bushala also supported exploring a water district concept, citing Orange County water agencies and special districts as examples. But that discussion seemed to blur several different concepts. An independent public water district is not the same as a private water company. A city-owned water utility is not the same as a private franchise. A regional public water agency is not the same as selling the system to an investor-owned utility.

The core issue is not that some committee members opposed a sales tax. Reasonable people can disagree about taxes. The issue is that the committee majority did not take responsibility for the consequences of opposing revenue. If the city should not raise taxes, then the committee should identify the cuts. If the cuts are too harmful, then the committee should recommend revenue. If revenue is delayed, then the committee should recommend a realistic bridge plan for the upcoming budget and a recurring solution for future years.

Instead, the majority voted to recommend exploring a long-term water-system proposal that staff warned would not address the immediate timeline. They wanted the politics of opposing a tax without owning the service cuts required to avoid one.

Fullerton’s budget is due in June. The city does not have the luxury of pretending speculative long-term restructurings are the same thing as actionable budget recommendations. Water utility sales, a new water district, airport redevelopment, public safety contracting, and surplus land strategies may all be topics for future study. But they do not answer the question before the city right now: How will Fullerton close a projected $13.7 million deficit without devastating core services? The committee majority did not answer that question; they only offered a delay.