Santa Ana officials are moving forward with a balanced budget, but continue to warn that it will be hard to maintain in future years without addressing either revenue sources or spending.
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Recurring revenues and spending on day-to-day operations are each projected at about $427.3 million for 2026-27, after balancing measures were incorporated.
But city officials say said future costs are expected to grow faster than revenues, driven in part by inflation, labor agreements, contract costs and pension obligations. And Santa Ana’s local sales tax, which this year added $84 million to city coffers, is set to begin its phase out in April 2029.
The 2026-27 budget maintains core services without layoffs or furloughs of full-time employees, though several vacant positions have been eliminated. An earlier projected gap of about $19 million in the general fund was closed through a mix of spending reductions, revenue adjustments and other balancing measures, according to city staff.
Property taxes are among the city’s largest funding sources, with nearly $127 million expected in 2026-27, about $1.8 million more than the current fiscal year, or a 3.7% increase. Sales taxes also play a major role and are expected to bring in even more than property taxes.
The city projects about $146.4 million from related sales-tax revenue for the upcoming fiscal year. That includes $59.6 million from the 7.25% sales tax that is collected statewide and then dispersed to local administration, $84 million from Measure X, the city’s local 1.5% sales tax, and $2.8 million from a half-cent public safety sales tax collected statewide.
Taxes related to allowed cannabis sales and businesses in Santa Ana are forecast to contribute another $13.1 million in revenue.
In simple terms, the city expects to make enough money to cover its ongoing bills and annual reserves contribution, but not much more.
Factoring in some one-time spending that is planned, the total general fund expenditure for 2026-27 would be about $435 million, with the city planning to pay for the extra spending with available fund balances rather than ongoing revenue.
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Public safety remains the largest general fund expense, with the Santa Ana Police Department being the largest single department receiving general fund dollars, followed by fire and emergency medical services. Together, public safety costs account for about $228.4 million, or roughly 53% of the general fund.
For Santa Ana residents, the budget includes visible investments back into the community, ranging from Cabrillo Park site improvements to lighting and security cameras along the Alton Bike Trail, streetlight and sidewalk maintenance, and a shade structure for Edna Park. It also includes funding toward land acquisition for a possible Washington Square Park.
Cuts to balance the budget will reduce or restructure several public-facing services, including park maintenance, alley improvements, streetlight pole work, arts and culture programs, youth and senior excursions, median landscaping, tree maintenance, seasonal community center operations and the Police Athletic & Activity League program.
Mayor Valerie Amezcua said during a recent public review of the proposed budget that she did not support reducing the PAAL program, adding that it is “not just an after-school program,” but a way for young people to develop relationships with first responders. City officials clarified that PAAL funding will be reduced, not eliminated.
Funding for a Washington Square Park also drew debate during recent budget discussions, with Councilmember Thai Viet Phan questioning whether the city should move forward without a clear source of money to build and maintain the park. Santa Ana City Manager Alvaro Nuñez said staff could return with a 90-day update on negotiations for the land purchase.
If the project does not move forward, Nunez said the issue could be revisited during the city’s midyear budget review.
The proposed budget is scheduled to be finalized following a second reading at the upcoming June 16 City Council meeting, with the new fiscal year set to begin on July 1.
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