Santa Barbara City Budget Falls into Place Without Major Cuts

City Council Moves Forward on Budget with Additional $2 Million for Affordable Housing

Santa Barbara City Council is moving forward with its two-year budget plan, including an additional $2 million per year from the city's reserve fund towards the city's Local Housing Trust Fund. | Credit: Elaine Sanders

Santa Barbara City Council’s budget deliberations went surprisingly smoothly Tuesday, with the council approving the City Administrator’s two-year budget plan and coming to a consensus over how to allocate a combined $5 million each year toward affordable housing without making any major cuts.

Coming into the final day of deliberations, the push to increase the city’s contribution to housing to the magic $5 million mark — led by a coalition of seven organizations — was the dominant point of contention. While most of the council had voiced support for funding affordable housing, there was still no agreement on how exactly the city would find the extra money to fill the housing fund.

Councilmember Kristen Sneddon said she was pleased that the city was able to find a way to fund its priorities — including an additional $2 million to affordable housing — without any major cuts. “There are no new cuts this year for the first time in years, and that is something huge to celebrate,” she said. | Credit: Elaine Sanders

The passage of the Measure I sales tax last year gave the city much more breathing room with balancing the 2026-27 budget, adding an expected $15 million a year in revenues that allowed the council to make up for shortfalls in other areas and maintain dozens of positions that would have otherwise been eliminated. Without Measure I, City Administrator Kelly McAdoo explained during an earlier budget hearing, the city would have had to “lay off 34 police officers in order to balance the budget.”

The original budget plan called for $1.5 million to be allocated to a flexible housing and homelessness fund and another $1.5 million to the city’s Local Housing Trust Fund, which could fund “Capital A” affordable housing projects. Councilmember Meagan Harmon, Kristen Sneddon, and Wendy Santamaria had been pushing for the city to increase that contribution either from Measure I revenues, a change to the city’s reserve policy target, or adjustments elsewhere; the more fiscally conservative members of the council argued that changing the reserve policy would be too big a step.

Instead, the gritty details were worked out during a Finance Committee meeting just a few hours earlier, where the committee found a much simpler way to make the plan work. Councilmembers Harmon and Eric Friedman suggested a less-drastic alternative to take a one-time $2 million from the city’s reserve fund — not adjusting the policy permanently— to combine with the $3 million already budgeted for the housing fund.

When the idea came to the council hearing, the remaining question was whether the council would approve the $2 million contribution for one or two years. Councilmembers Friedman and Mike Jordan both pointed out that the city should consider itself lucky to avoid the bigger problems that many other communities face during budget season.

“I know it got a little contentious over the additional $2 million, but we’re very fortunate that that’s what we’re arguing about,” Councilmember Friedman said. “I think pretty much every city in the state would love to be in our position.”

*Mayor Randy Rowse voted against dipping into the reserves, saying that he felt that the $5 million figure for affordable housing was “arbitrary.” | Credit: Elaine Sanders*

The council voted 6-1, with Mayor Randy Rowse opposed, to fund the extra $2 million for Fiscal Year 2026 from the reserve fund to the Local Housing Trust Fund, with the condition that the money taken out of reserves be replenished and the city would make a plan for more permanent funding. The motion for an additional $2 million for Fiscal Year 2027 passed in a 4-3 vote, with councilmembers Friedman and Jordan joining Mayor Rowse in opposition.

Councilmember Sneddon said she was pleased to see how the budget plan worked out at council. She let off a small cheer when the votes came in favor of the extra $2 million a year with no major impacts to city workers.

“There are no new cuts this year for the first time in years, and that is something huge to celebrate,” Sneddon said. “A huge thank-you to the community who voted for Measure I for essential services.”

But the city will still have to contend with uncertainty in the future. While the 2026 budget is projected with a surplus of a bit more than $500,000, the city is projecting a deficit of up to $3.5 million in 2027. And at the federal level, the Trump administration continues to slash funding for community development grants and other support programs, such as the harbor dredging project, which the city will have to fund itself after decades of consistent federal subsidization. These shortfalls will be addressed in next year’s budget planning cycle.

Council is expected to officially adopt the budget on Tuesday, June 17.