City of Fresno faces possible $20 million budget deficit in 2026

FRESNO, Calif. (KSEE/KGPE) – The City of Fresno could potentially face a budget deficit of over $20 million in the 2026 budget, according to a mid-year budget report to Fresno City Council.

“Our expenditures are exceeding our revenues. And as a result of that, although we anticipate ending this fiscal year in the black, we do know that we’re not going to be able to do that in the next fiscal year,” said Fresno Mayor Jerry Dyer.

Mayor Dyer sat down to talk about the ways the city looks to work to curb the potential deficit in the months ahead – it’s one amounting to an exact projected number of $20,656,900. The city says it’s due to multiple factors, especially lower-than-expected revenue in multiple areas relied on as key funding sources.

“What we are starting to see is a trending downward of our sales tax revenue. In fact, we’re on target to be about $4.5 million short on sales tax revenue,” said Mayor Dyer.

Additionally, hindering the city’s budget is a $3.9 million revenue shortfall for the city’s cannabis industry, as only 13 of the anticipated 19 dispensaries are up and running at this point. The city says many of those that are currently operating are heavily underperforming.

The city has also reaped the benefits of $170 million from the American Rescue Plan Act over the last several years, dollars also used for 2025 that the city will no longer be able to utilize.

“We utilized $27 million of American Rescue funds this year in the police and fire department budget,” Mayor Dyer said. “We planned ahead and knowing that those funds would run out.”

In 2025, the city expects to have an end-of-year surplus of nearly $15 million, but according to City Manager Georgeanne White, without those ARPA dollars, 2025 could have been similar for what they expect in 2026.

“We would have been in the red. So, I just note that. ARPA was a huge crutch for us and has been a huge crutch for us,” she said.

Now, Mayor Dyer says they are looking to tighten the belt as they work to soften the expected blow.

“We are selectively holding vacancies in our city. We are asking each of the departments for next year to provide a 5% budget cut exercise so that we can look and prioritize what areas that we’re going to cut back in,” he said.

The mayor says there are also ongoing conversations about creating additional revenue streams. One of those options he said, could be a possible flat-rate citywide fee on rideshare services like Lyft and Uber.

There’s nothing official yet, though.