Anaheim has a new $2.4 billion budget the City Council approved Tuesday, relying on stop-gap funding to maintain services before the city sees a massive influx of freed-up cash in a few years.
“This proposed budget upholds funding for all we do for our community,” City Manager Jim Vanderpool said. “It funds the most extensive services of any Orange County city. We are proud of that, but there are some very real challenges we continue to face.”
The city has had difficult budgets to balance in recent years, but those problems won’t last forever. More than $120 million will become available once 1990s resort bonds are paid off by 2027.
That should put an end to a structural deficit in Anaheim’s budget that city officials have used borrowed money to balance lately.
There aren’t any concrete plans set for how Anaheim could use the more than $120 million a year it expects. Refilling the city’s reserves that will get low and paying off other debt are likely a part of the plan, but Mayor Ashleigh Aitken indicated Tuesday that the funds also need to be used on “something transformative” for residents.
“I feel like it’s a chance for us to do something big, bold and transformative for this city,” Aitken said. “We won’t be able to do what Anaheim does best, which is think big, if we’ve spent it times over before we even receive it. So I want to make sure that we don’t lose sight of what a unique opportunity having those funds is, whether it’s transportation, whether it’s economic development, housing, parks.”
In the meantime, the city’s general fund budget was approved at $671 million for the 2025-26 fiscal year. The general fund represents more malleable parts of the budget the city can more easily adjust and excludes things such as public utilities and the city’s stadium and arena.
But projected revenue fell short by $63 million. So to balance the budget, the city is using hotel tax bonds it issued in 2021, funds it had from selling a parking garage near the convention center last year and money previously set aside to pay off debt.
Vanderpool said the city has been challenged by hotel tax revenue coming in lower than expected lately. Hotel tax revenues represent 39% of the city’s general fund and is the largest source.
Councilmembers expressed concerns about leaning so heavily on one-time borrowed money for balancing the budget.
“In my years of public service, I have learned recurring expenses should be matched with recurring revenue,” Councilmember Ryan Balius said. “If we are plugging budget gaps with temporary fixes, we may be facing a deeper structural issue that needs to be confronted head-on.”
In the new fiscal year budget, the city will have a record number of 430 sworn police officers. The city plans to hire three new homeless assistance liaison officers and another school resource officer. There will also be 248 sworn firefighters and paramedics.
Other budget challenges that haven’t been fully realized include higher costs through new contracts with the city’s labor unions and any loss in federal funding. Fears of a recession also loom, said Finance Director Debbie Moreno, and sometimes those fears become self-fulfilling.
Next year, officials expect to draw the city’s reserves down to the minimum level that Moreno said the city should feel comfortable with. The pandemic taught the city that having robust reserves is important since Anaheim relies heavily on tourism, Moreno said
“We are pushing the limits — that is a concern to me,” Councilmember Natalie Meeks said. “There’s not a lot of wiggle room in this budget.”
Budget notes
• Many of the city fees it charges to residents and businesses will go up slightly in line with the annual consumer price index at around 3%. The monthly solid waste fee for a single-family home was raised to $29.47 a month.
• Greens fees and membership dues are going up at the city’s two golf courses, Dad Miller and Anaheim Hills. Golf continues to grow in popularity, according to city officials.
• Anaheim has now paid off the debt it took on to build the ARTIC train station, according to Tom Morton, the city’s head of convention, sports and entertainment.
• Fifteen new positions between the public works, fire and planning departments will be fully funded by Disney as part of the DisneylandForward agreement, totaling $3.1 million. These positions are to support the development, review and inspection of DisneylandForward.
• John Wayne Airport has seen a 10% decrease in usage, another concerning trend for the city as hotel stays remain lower than previously projected.