-Editorial
At a special meeting on June 26, the Calexico City Council analyzed the proposed 2025-2026 fiscal year budget with a magnifying glass, carefully reviewing spending plans and questioning department heads about projected expenditures.
Before the start of the meeting, Calexico City Attorney Carlos Campos announced that Police Chief Armando Orozco will step in as interim city manager following the end of Rick Daniels’ contract with the city earlier this week. Campos also reported that the City Council, during closed session, directed staff to begin an employment agreement with a finalist for the permanent city manager position.
The proposed 2025-26 budget reflects a balanced General Fund operating plan, maintaining a reserve at the City Council’s policy level of a 68-day operating cushion. While the city has benefited in recent years from solid tax revenue growth, the latest projections for the upcoming fiscal year show a flat trend—particularly in sales tax revenues—prompting a cautious approach to new spending and staffing.
Despite requests from departments totaling more than $2 million and 15.2 additional full-time equivalent (FTE) positions, the proposed budget includes only one new position—a second School Resource Officer for the Police Department—supported directly by new revenue streams. Overall, the staffing plan reflects a net reduction of 1.5 FTEs, with 3.5 vacant positions removed and two revenue-backed positions added.
Total General Fund revenues are projected to increase by 4% from $23.2 million in FY 2024-25 to $24.1 million in FY 2025-26. Property and sales taxes remain the City’s largest sources of discretionary revenue, making up about 65% of General Fund income when combined with the Measure H sales tax transfer.
Property tax growth remains constrained under California’s Proposition 13 cap of 2% annually. Additionally, volatility in Redevelopment Property Tax Trust Fund (RPTTF) allocations continues to pose risks. Sales tax growth, which has buoyed the City’s recovery in prior years, is now expected to increase by less than 1% for the upcoming fiscal year.
On the expenditure side, total General Fund costs are projected to rise by $1.06 million, from $23.05 million to $24.11 million. This includes a $328,000 increase in CalPERS unfunded liability payments—now totaling over $2.6 million annually—as well as modest increases in operating costs, insurance, utilities, and professional services contracts. Notably, the City will not implement Cost-of-Living Adjustments (COLAs) in FY 2025-26, deferring such changes until supported by improved revenue conditions.
A major feature of the proposed budget is its robust capital improvement program (CIP), which earmarks $112 million in expenditures for FY 2025-26. Over five years, the City plans to invest $176 million across more than 170 infrastructure projects. These include transportation improvements, water and wastewater system upgrades, and facility replacements.
Funding for the CIP comes from a mix of existing bond proceeds, development fees, customer utility fees, and federal/state grants. The first year of the five-year plan is fully funded, while subsequent years will require future rate adjustments and additional revenue sources to be fully implemented.
The CIP also includes the final allocations of the City’s $9.9 million American Rescue Plan Act (ARPA) grant. With federal reporting requirements fulfilled, remaining ARPA balances may now be flexibly reallocated to support local infrastructure needs.
The City’s enterprise funds—covering water, wastewater, and airport operations—face continued budget constraints. Each of these utilities operates on a cost-recovery model through user fees but increasing expenses and aging infrastructure are creating pressure on these systems. The Water and Wastewater funds are expected to hold vacancies and delay capital investments in order to meet debt service obligations. Both funds will undergo rate studies in FY 2025-26, with placeholder increases tentatively scheduled for January 1, 2026.
The City’s Airport Fund remains in structural deficit and is anticipated to receive a $98,000 General Fund subsidy for a second consecutive year. To narrow the shortfall, the city proposes fee and hangar lease rate increases and a reduction in authorized staffing.
Calexico administers various grant and revolving loan funds for public safety, libraries, housing, and other targeted uses. The city continues to await clearance from the State Department of Housing and Community Development (HCD) to reassess revolving housing program revenues under the CDBG, HOME, and CalHOME programs. Meanwhile, the Housing Successor Fund—under local control—retains cash balances that may be deployed once viable affordable housing projects are identified.
While the 2025-26 budget is structurally balanced, the City’s long-term fiscal outlook remains uncertain. The five-year forecast projects that without new development or significant revenue increases, Calexico will face shortfalls in funding capital replacements, sustaining service levels, and meeting CalPERS pension obligations. According to budget documents, annual new revenue of $1.3 to $2.2 million will be necessary to bridge future operational and capital gaps.
The city continues to focus on enhancing Planning, Engineering, and Building operations to facilitate private development and expand the tax base. A user fee study currently underway will examine cost-recovery across departments—particularly in Water, Wastewater, and Airport services—to ensure financial sustainability moving forward.
Calexico resident and Community Services Commission Chair Pat Urena expressed frustration with the city’s lack of long-term planning during the budget hearing, questioning the overall process and the absence of a clear direction. Urena emphasized the need for a comprehensive strategic plan, stating that without a three-, five-, or even 20-year roadmap, the city will continue to “run in circles” without meaningful progress. She pointed to the neglected state of downtown, including poor maintenance and foul odors, as signs of the city’s stagnation, and called for greater inclusion of business owners and departments in shaping a unified vision for Calexico’s future.
At Thursday’s meeting, the Calexico City Council failed to pass its 2025-2026 budget after a 2-2 vote during a special meeting on June 26, with Councilmember Lorenzo Calderon absent. Mayor Diana Nuricumbo and Councilmember Lisa Tylenda opposed the $160 million plan, citing concerns over assumptions like water rate hikes and a lack of transparency in budget-building. With no resolution, the city will continue operating under the current budget as the new fiscal year begins July 1.