City has apparently closed its $3.2 million budget gap for next year without cutting jobs, but the path the city took to get there is still challenged by looming fire and lifeguard contract negotiations
City Manager Steve Napolitano told the Hermosa Beach City Council on Tuesday night that he has a plan to close the forecast FY27 structural deficit of $3.2 million without workforce reductions, through a combination of fleet maintenance cuts, reserve adjustments, and operational efficiencies identified across every department.
That headline conclusion, delivered at the third of seven scheduled budget meetings, came packaged with significant caveats. Each department also walked the council through what a 10 percent reduction scenario would look like, with most acknowledging that reaching that threshold would require freezing or eliminating positions. Staff is not currently recommending those cuts. The exercise was framed as building a contingency reserve against unknowns, including the looming LA County fire and lifeguard contract renewal, rising costs on multiple maintenance contracts reaching the end of their terms, and the city's ongoing capital improvement backlog estimated at between $90 million and $220 million.
Police Chief Phillips presented the starkest picture. A non-personnel 10 percent cut yields $630,000, achievable by reducing conference and training, contract services, equipment replacement, and overtime. Reaching the full $2.1 million figure would require freezing five sworn officer positions and one community service officer, dropping the department to minimum staffing of two officers and a supervisor per shift. That, Phillips said, would be the lowest sworn level in over 25 years.
Public Works Director Joe SanClemente flagged several maintenance contracts reaching the end of their terms this year, including janitorial, landscape, tree services, and the LA County beach maintenance contract. Costs are likely to rise on all of them, and the figures will not be known until the contracts are advertised. The lighting and landscape district remains structurally underfunded and relies on a general fund transfer; raising the assessment would require a ballot initiative.
Parks and Recreation Director Lisa Nichols told the council the department forgoes substantial revenue annually through long-term agreements, fee waivers, and gaps in the special event permit fee structure. Most long-term event agreements expire in 2026, opening a renegotiation window. The department claims to recover about 77 percent of its costs.
Administrative Services, City Manager's Office, City Clerk, and Community Development each presented narrower reductions, mostly involving vacant positions, technology efficiencies, and consolidated workflows. The city's in-house implementation of a new ERP system, led by Finance without an outside consultant, is projected to save roughly $400,000.
Council pressed on the citywide overtime figure of roughly $1.5 million annually, asking whether some portion could be reduced through scheduling adjustments or comp time. Phillips and Napolitano said most of the overtime is unavoidable, driven by mandatory minimum staffing, holdovers on active incidents, vacation and sick backfill, and special events. A more detailed analysis will return at a future meeting.
Council also called for an outside independent review of city department processes, staffing, and shift structures, similar to the review currently underway on legal services.
Administrative Services Director Brandon Walker previewed a list of revenue strategies that will return with detail at the May 26 meeting. The list includes expanded Transient Occupancy Tax through short-term rental licensing, revisiting hotel and STR tax rates, a potential local sales tax measure, expanded parking metering in coastal and downtown areas not currently covered, dynamic parking pricing, an asset utilization review, and stormwater fee evaluations.
The STR licensing component carries new weight following Tuesday's closed-session decision not to appeal the landmark Koerner ruling, which leaves coastal-zone short-term rentals operating without a legal framework but also without an enforcement mechanism.
Hermosa Review
The deficit is apparently solved for one year. The five-year forecast remains unresolved, the capital backlog is unfunded, and the city's contractual cost exposure is rising on multiple fronts at once. Napolitano explicitly framed Tuesday's presentation as building a buffer for what comes next, not declaring the problem closed.
Four budget meetings remain. The May 26 session covers revenue strategy in detail. May 28 covers the capital improvement program. Adoption hearings are scheduled for June 9 and June 23.
The council voted unanimously to receive and file Tuesday's presentation.
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Hermosa Review
Hermosa Review
Greenbelt is back on the table as a possible site for Hermosa Beach's first off-leash dog park, six weeks after the community group driving the project had walked away from it, following a Council vote Tuesday that revived the option and put a potential November ballot measure into play.
After nine years of trying to enforce a short-term rental ban that courts have now declared illegal, Hermosa Beach is poised to start collecting hotel-tax revenue on roughly 200 coastal-zone rentals it has spent the better part of a decade trying to shut down.
Hermosa Beach has roughly 3,000 dogs and not a single place to legally let any of them off-leash. The City Council on Tuesday will consider whether to change that, with Valley Park East emerging as the preferred location for the city's first off-leash dog park.
The City is spending $8M to $12M a year fixing things. Available project funding for next year: $4.7M. A pandemic-era cushion that papered over the gap is gone and the unfunded backlog has now grown to somewhere between $148 million and $280 million, with the Pier replacement now added to the list.
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