Rio Communities Faces $1.16 Million Budget Gap as Key Funds Expire

Rio Communities finance officer Cassandra Montano warned the city council last week that the city faces a $1.16 million shortfall for fiscal year 2027, with previously committed recruitment and one-time funds set to sunset on June 30 and projected revenues falling short of what it costs to keep the lights on.

Montano told the council and mayor they will soon have to make some difficult decisions in order to create and adopt a balanced budget. Before her presentation, City Manager Marty Moore told the governing body that staff are already analyzing what the city's revenue needs will be heading into the next fiscal year.

The current year's general fund revenue is on track to bring in $1,981,338, drawn from the usual mix of gross receipts tax, property tax, franchise tax, licenses and permits, charges for services, and other sources. But Montano projects that figure will slip to approximately $1,912,175 in fiscal year 2027, a drop of roughly $59,000. She attributed the decline to a reduction in the state share of tax distribution and lower permit activity.

At the same time, expenses are climbing. Montano cited a $30,000 increase in the city's payment to the Valencia Regional Emergency Communications Center, which rises from $77,500 to $107,500, as one of the more significant line-item jumps. Overall, she placed projected general fund expenses for fiscal year 2027 at about $3.07 million.

"This is assuming that all current staffing and service levels remain the same," Montano said. "What we're seeing here is not the result from major expansions; it reflects the cost of maintaining the city's level of operations."

With roughly $1.9 million in projected revenue set against expenses approaching $3.07 million, the arithmetic leaves a gap of $1.16 million. "The gap represents the difference between what it costs to operate under the current level and revenue that is expected to come into the general fund," Montano explained. "We want to bridge that gap."

The budget for fiscal year 2027 must be adopted before the June 30 expiration of the one-time funding that has helped sustain current service and staffing levels, adding urgency to whatever path the council chooses to close the shortfall.