Citing uncertainty at the federal level, Pasadena officials said the forthcoming budget process would be one of the most challenging in recent memory.

Pasadena City Council met Monday, May 5, and opened the first public hearing on eventually adopting the 2025/2026 fiscal year budget. According to the city charter, the city manager is required to present a proposed budget by the third week of May each year.

City Manager Miguel Marquez described this year’s budget process as very tight. He said decreasing sales tax revenue and little growth in property tax play into an overall uncertain time.

“This is the most challenging budget we’ve had in quite a long time,” Finance Director Matthew Hawkesworth said. “Candidly, recessions are sometimes easier because you see the writing on the wall and you know where it’s going and this one every week it seems things change.”

Hawkesworth reported a $1.34 million general fund surplus in the proposed budget. With the projected surplus the budget proposed additional spending on additional positions, equipment and other programs after which approximately $120,000 remained.

“For all intents and purposes is a flat, balanced budget,” Hawkesworth said.

No action was taken on the budget Monday but the public hearing was continued to a future council meeting. It will be continued until the budget is formally adopted next month.

The next step is for the proposed budget to be presented to council committees that have jurisdiction over the various city departments.

“It’s clear that we don’t have enough resources to meet the needs that we have,” Marquez said. “We’re not funded based on need, we’re funded based on formulas.”

Marquez highlighted that the city is not proposing any staff layoffs or a hiring freeze in the budget. As an example of the volatility surrounding the budget process, Marquez pointed to the recently proposed federal budget, which proposes cuts to programs such as Community Development Block Grants and moving Section 8 and other rental assistance programs to the states.

“So you can imagine the pressure it’s going to put on us and so we have to keep a prudent level of reserve, we have to be really cautious in our spending,” Marquez said.

During the meeting the council approved a capital improvement program budget that laid out projects from 2026 to 2030. It included 218 active projects with a total estimated cost of about $2.5 billion.

About 50 future projects do not have an identified funding source for the next five years, according to a city staff report. For the next fiscal year, a proposed $446 million has been appropriated toward CIP projects.