Arcata approves hiring freeze as budget deficit tightens

Vacant city jobs in Arcata are now being held open as the city slows work on some projects and tightens the screws on staffing. That includes at least one planning vacancy, a sign that residents could see delays filter through permitting, planning and other day-to-day city services as officials get more conservative about how they spend.

The Arcata City Council quietly approved the move through the consent calendar, adopting Resolution No. 256-71 to create a temporary hiring freeze for vacant positions. The council, a five-member elected body, meets at 6 p.m. on the first and third Wednesday of each month at City Hall, 736 F Street.

City Finance Director Tabatha Miller said the city has been squeezed from both sides, with revenues down and expenses up. A May 13, 2026 staff report projected a $2.6 million deficit in the city’s FY 2026-27 General Fund budget, after earlier reductions. The same report said General Fund revenues were expected to fall about 4 percent, or $900,000, from FY 2025-26, while personnel services costs were expected to rise about $1 million, or 7.5 percent.

That higher cost picture reflected more expensive health care, a 3 percent cost-of-living adjustment and lower vacancies. Staff also projected a 5 percent drop in sales tax and transient occupancy tax revenues, along with a decline in supplemental property tax revenues that come in after property sales and reassessments. Because the General Fund pays for police, city administration and other municipal services, the shortfall reaches into the city’s most flexible money.

Miller said the first roughly $3 million in savings came from cleanup items and by shifting or removing some capital spending. The harder second $1.6 million required a line-by-line review, including a 10 percent reduction in part-time staffing and a $250,000 cut to supplies and materials. The city also took a more conservative view of sales tax estimates, while work on Reconnecting Arcata slowed to near-halt and paving projects, including work on the Sunset Avenue roundabouts, were delayed.

Some capital priorities survived the squeeze. The Annie and Mary Trail project was spared because Arcata’s $484,000 contribution helped unlock an additional $7 million in grant funding. City Manager Merritt Perry said the city wants to make adjustments sooner rather than later and avoid more disruptive steps like furloughs, which he said are inefficient for essential workers such as police.

Arcata’s OpenGov transparency portal listed FY 2026-27 proposed revenues of $87,328,544 and expenses of $94,875,074 citywide, a gap of $7,546,530 across all funds. The city’s finance pages also show annual financial statement archives dating back to 2007, giving residents a long view of how this year’s tightening compares with earlier budgets.