The Fullerton City Council on August 18, 2026, approved the city’s fiscal year 2026-27 operating and capital budget after a contentious debate over cuts to city services, vacant positions and the use of reserves. The budget includes a $283.4 million all-funds spending plan, including the General Fund, enterprise funds, special revenue funds, internal service funds, the Capital Improvement Program and Successor Agency budget. The General Fund budget totals $147.2 million, including transfers. The budget passed 3-2, with Councilmembers Jamie Valencia, Mayor Pro Tem Nick Dunlap and Mayor Fred Jung voting in favor. Councilmembers Dr. Shana Charles and Dr. Ahmad Zahra voted against it.

Finance Director Steven Avalos told the council that Fullerton began the budget process with a projected $13.7 million deficit. That deficit was reduced to $3.8 million during July budget meetings before additional reductions, revenue enhancements and one-time solutions were incorporated into the final proposal.

The adopted budget is balanced without a planned draw on General Fund reserves. Staff said the balance was achieved through approximately $2.4 million in revenue enhancements, $6.9 million in expenditure reductions and one-time budget solutions, including transfers and reimbursements from internal service funds. The city projects ending the fiscal year with approximately $16 million in fund balance. Staff also presented a three-year forecast that maintains a $16 million ending fund balance through fiscal years 2027-28 and 2028-29, assuming the current operating reductions and selective use of one-time solutions continue. The city’s budget presentation described the underlying problem as a structural imbalance, meaning recurring costs of providing municipal services exceed recurring revenues.

Public safety remains the largest component of the General Fund, accounting for approximately 73% of General Fund expenditures. The proposed budget includes both the Police and Fire departments. The budget, however, leaves several vacant positions unfunded. Staff initially identified 26 vacant positions for elimination, producing approximately $5.1 million in savings. Among the positions affected were six sworn police positions, a Fire Deputy and Fire Marshal position, as well as positions in other departments. Staff warned that leaving the positions unfunded would reduce the city’s capacity to provide some services.

During the council discussion, police officials said the department would have to distribute the workload among existing personnel and rely on overtime to fill some operational needs. Councilmember Charles questioned the impact of the police cuts and the decision to leave Fire Marshal responsibilities unfilled. Fire Chief Adam Loeser said that, without a Fire Marshal, those responsibilities would fall to him and potentially other members of the department’s executive staff. The budget does increase police overtime funding. Avalos explained that the adjustment was not specifically ordered by the Grant Thornton audit, but followed the audit’s observation that the city had historically budgeted significantly less overtime than it actually spent. Police overtime had exceeded $2 million annually in recent years, while the city had budgeted approximately $800,000 and relied on salary savings to cover the difference.

One of the most contentious issues was a $200,000 reduction in the city’s library book collection budget. Staff said the reduction would be temporarily offset by the Fullerton Library Foundation and Friends of the Library. The foundation pledged $200,000 to cover the expense. Zahra strongly opposed the reduction, arguing that a city that calls itself the “City of Education” should not reduce funding for library books. He also criticized reductions to graffiti removal and other city services, saying the cuts could disproportionately affect neighborhoods that already experience higher levels of graffiti. Staff estimated that the graffiti-removal reduction would save approximately $150,000. The city manager said he could attempt to identify savings elsewhere during the fiscal year to preserve the program, with the possibility of returning to the council for additional funding if necessary.

Charles also questioned whether replacing one full-time library technology position with three part-time positions would provide the same level of service. Staff said the library director believed spreading the hours across the library’s operating schedule would provide greater flexibility and meet the department’s needs at a lower cost. The council had previously directed staff to explore ways to restore some services using $1 million from internal service fund reserves. The resulting reinstatement plan restores several positions, including three part-time library technology positions, an economic development position and two engineering positions connected to private development projects. The plan also increases police overtime to more accurately reflect historical spending.

Staff also identified another $300,000 in savings from the city’s group insurance fund and proposed reallocating it to the Operation Clean Streets initiative. Staff also restored six Public Works positions after identifying alternative funding sources, including the Gas Tax Fund and other funds. Staff said those reinstatements would not affect the General Fund savings target.

The council’s debate centered partly on whether maintaining approximately $16 million in fund balance justified cuts to current services. Zahra called the budget “irresponsible and reactionary,” arguing that the city had more measured options available. He questioned reducing library funding, graffiti removal and public safety staffing while maintaining reserves. Charles similarly questioned whether the city should maintain $16 million in reserves while reducing services. She said graffiti removal was an essential service and raised concerns about the impact of staffing reductions on police, fire and library services. Dunlap defended the budget, saying the city was not simply dealing with a deficit but needed to respond to an underlying financial problem. He argued that a three-year approach provided greater financial certainty than addressing the problem year by year. Jung also supported the budget and emphasized the importance of living within the city’s means. He described the budget process as unusually transparent and said that government should exercise financial discipline just as residents and businesses are forced to do.

Zahra disputed that characterization of the budget process, pointing to findings from the city’s previous audit and arguing that transparency problems had existed in prior budget processes. He also said government spending is meant to provide services to residents and that cuts reduce what residents receive for their tax dollars. The city’s Capital Improvement Program totals $28.9 million for fiscal year 2026-27. Street projects account for $11.4 million, while the city plans to invest $6.9 million in water infrastructure and $2.5 million in sewer improvements. The budget also includes a $5 million federal Complete Streets grant.

The council also approved changes to the city’s master fee and charges schedule. Proposed changes include increases to Fire Department user fees to achieve full cost recovery, adjustments to Parks and Recreation and library fees, and higher airport tie-down and hangar rental fees. The adopted budget eliminates the immediate projected operating deficit, but the debate demonstrated that balancing the city’s finances comes with choices about the level of services Fullerton provides.

Staff’s three-year forecast assumes the city maintains its reductions and relies on selective one-time solutions while targeting balanced operating budgets in the following two fiscal years. The forecast does not include future union contract increases beyond those already incorporated into existing agreements.

For supporters, the budget represents a necessary step toward restoring fiscal stability and living within recurring revenues. For opponents, maintaining reserves while reducing staffing and services represents a decision to prioritize financial reserves over current community needs.

The 2026-27 budget ultimately passed 3-2, setting Fullerton’s spending and service priorities for the coming fiscal year.

Services reduced or at risk under the 2026-27 budget

The adopted budget reduces or limits several city services through operating cuts and vacant positions:

• Library books: The city reduced its library book collection budget by $200,000. The Fullerton Library Foundation pledged to temporarily cover the amount.
• Graffiti removal: Funding for graffiti removal was reduced by approximately $150,000, raising concerns about slower responses and increased graffiti, particularly in neighborhoods where the problem is already significant.
• Police staffing: Six sworn police positions were among the 26 vacant positions initially left unfunded, reducing staffing capacity and potentially increasing reliance on overtime.
• Fire Department staffing: The Fire Marshal and Fire Deputy positions were left unfunded. Without a Fire Marshal, those responsibilities would be absorbed by the Fire Chief and potentially other command staff.
• City maintenance and services: Vacant positions, including a senior maintenance worker, police services representative/records clerk and permit technician, were among the positions identified for elimination. Staff warned that these reductions could reduce the city’s capacity to provide services.
• Community events: The budget eliminates the First Night event and changes the city’s July 4 celebration to a fireworks-only event, saving approximately $500,000 in community programming.
• Security and graffiti services: Security services at various city facilities and graffiti removal were reduced as part of approximately $1.8 million in operating reductions.
• Library technology staffing: Rather than restoring one full-time library technology position, the city proposed three part-time positions, intended to spread technology support across more library operating hours.

In short: Fullerton balanced the 2026-27 budget without a planned draw on General Fund reserves, but did so partly by reducing staffing and services. Some reductions were restored through the $1 million reinstatement plan and alternative funding, while others remain in the adopted budget.