City confronts deficit as one-time budget fixes are exhausted
by Laura Garber “Doing nothing is no longer an option.” That was Hermosa Beach’s City Manager Steve Napolitano’s message to Council Tuesday, April 26 during the first of seven scheduled budget sessions centered on a looming $3.2 million 2027 deficit. “The city’s current fiscal path is unsustainable,” Napolitano said. “Hard choices will be proposed to fill the gap through a combination of spending cuts and revenue enhancements.” Administrative Services Director Brandon Walker told the council recurring costs are growing four to six percent annually while revenues grow only two to four percent. The result is a projected five-year shortfall of $19.3 million. Which is nearly twice the city’s current general fund reserves of $10.6 million. The city balanced its 2025-2026 budget using one-time funds, including federal pandemic relief, staff vacancy savings and deferred capital spending. “Revenue was not keeping up with expenses over the past five years,” Walker said. “We were just lucky enough to have one-time windfalls every year to cover shortfalls.” Major cost drivers include a 26 percent increase in the LA County fire contract, adding roughly $1.8 million over the next three years…
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