Following a public hearing, the City Council on Monday, June 8, formally adopted the 2026-27 budget. The vote was 3-2, with District Three Councilwoman/Mayor Lisa Landau and District Four Councilwoman Patty Senecal casting the dissenting votes.
Asked why they voted no, Landau on June 10 wrote: “Because I really wanted to see more of a tighten our belt plan to make sure we don’t go into a deficit next year.”
Senecal wrote: “The budget is our most important planning document. I commend our city staff for their diligence in preparing the 400 page document. The budget shows a growing deficit. The budget noted the uncertain economic landscape will require both discipline and adaptability for long-term financial stability. I voted no because operating costs continue to grown faster than revenues. I wanted to hear more options to prevent the projected deficit before committing taxpayer dollars.”
The budget is balanced, according to the staff report by Finance Director/Treasurer Barbara Arenado.
However, some members of the public were concerned about the city’s long-term financial well-being. Ellery Deaton, a former council member, asked the council not to adopt the budget.
She said either the city was going into a deficit or the money is parked in the budget so that there will be a surplus next year. She said she assumed the budget was an honest document. “The city manager on page 11 warns us—for the second year in a row—that we are heading into deficit,” Deaton said.
The word deficit only appears in the glossary. On page 11, City Manager Patrick Gallegos wrote: “The FY 2026-27 Budget indicates that sufficient financial resources exist for this year. While those resources can fund operations, the City faces long-term financial challenges as evidenced in the long-term Financial Plan in funding its obligations in the future.”
The most recent five-year projects did project deficits in the years after 2026-27.
According to a table on page 9 of the revised budget, the 2026-27 is expected to have a surplus of $15,976.
Deaton called for a five-year recovery plan before the budget was adopted.
Later, Finance Director Arenado said the city budgeted differently when Deaton was on the council. “Expenditures went up 3% and revenues went up 3% and that’s what we were projecting in the five-year,” Arenado said. She said she changed that when she came to Seal Beach. She said she wanted the numbers to reflect what would actually happen. “Am I going to hit that target?” she said.
“We were in a deficit this year,” Arenado said. According to Arenado, the Finance Department worked with other departments to balance the budget.
“We do this every year,” she said.
“Our goal isn’t at the end of the year to have millions of dollars left over to put in our coffers,” she said. She said if the city had $50 million in revenues and $52 million in services, the city needs to bring that down but the city needs to provide services “today.”
She said the city knows there’s going to be a deficit because the city has ongoing memorandums of understanding agreements, and CalPERS costs. As for revenues, she said staff can’t build anything into the five-year forecast.
Theresa Miller expressed concern about transparency in the budget. She said there was $7.5 million dollars in carryover funds that was “not real money” but was contingent on debt that has not been issued. She also said the CIPs (improvement projects) are not current. She argued the budget was not ready.
Arenado said CIPs take place over several years. She said it was not about how much the city could spend in a year.
Arenado also said she couldn’t imagine a year when Seal Beach would have a huge balance left over. She recommended coming back to council to talk about CIPs.
Resident James Jensen said he didn’t understand why the city wouldn’t want money left over.
He also said real transparency meant making it understandable to citizens. He argued that staff could always find something to cut.
Arenado said staff does run the city like a business. She said the city’s auditors say Seal Beach is one of the best run cities. “I take pride in what I do,” she said.
By policy, 25% of the General Fund balance is the city’s “reserve target,” according to the staff report. She said staff was looking at billboards—apparently a reference to the council goal of generating revenue by advertising on digital billboards. She also brought up other potential sources of revenue. (Space doesn’t permit listing everything discussed during the three-hour 46-minute meeting.)
District Four Councilwoman Patty Senecal said information about projects needed to be transferred to the city’s website. She also asked about the City Hall staircase project. She said work had already started, but it’s budgeted. Public Works Director Iris Lee said hazardous materials were identified in the staircase and that was being addressed right now.
Senecal described the roughly $16,000 projected surplus as “very thin.”
She asked why staff didn’t bring the council the option of a reduction to the budget.
According to Arenado, the goal is to provide services at the capacity provided in the budget cycle and then to save as much as possible.
District Three Councilwoman/Mayor Lisa Landau asked how quickly Seal Beach could move in response to a financial problem.
City Manager Patrick Gallegos said staff can pivot very quickly. He said in the 14 years he had been in Seal Beach, the council had made balancing the budget priority number one.
District Five Councilman Nathan Steele said when you build a budget, you have to make assumptions. “We don’t know what our revenues are actually going to turn out to be,” he said. Steele said there are four good-sized cities that are in trouble now because of a lack of financial discipline. “This budget is balanced,” he said. “We don’t know what the future’s going to be,” Steele said. He said the budget did not need additional cuts.
According to Arenado’s staff report, the budget estimates $50 million in revenue and $50 million in operating costs and capital projects of $16.8 million. The budget includes a $250,000 discretionary payment to CalPERS.
