Sacramento Charts an Economic Course Through $62M Deficit

Los Angeles isn’t the only city struggling against a significant structural deficit in the upcoming fiscal year — the state’s capital city is in a similar boat, eyeing staffing reductions and broader departmental budget cuts.

Sacramento is in the midst of trying to correct a $62.2 million structural budget deficit that will come with millions in programmatic and personnel reductions. IT will also see some slight belt-tightening, with a 1.4 percent reduction from $35.7 million in the 2024-25 budget to a proposed $35.3 million.

The proposed 2025-26 budget calls for the net elimination of 70.5 vacant full-time positions and 12.8 filled full-time positions — an improvement over earlier reductions that would have cut some 20 positions from the IT Department (ITD) alone.

The city’s Reduction Strategy classifies the potential cuts into four categories: Level 1 – Low Impact; Level 2 – Moderate Impact; Level 3 – High Impact; and Level 4 – Severe Impact. An earlier version of the document showed significant impacts to the ITD workforce, but has since been amended.

Those early cuts would have had significant operational impacts across federal radio license compliance issues, strained customer service interactions, document retrieval and storage problems, among many others.

According to the updated document, ITD would face only two Level 1 reductions, effectively offsetting three positions. Two of those positions — a Senior Department Support Specialist and Department Support Specialist I — are focused on the code enforcement system. One other position, a Systems Engineer focused on the Parking Division's technical operations, would also see a Level 1 reduction. These reductions are projected to save $450,000.

While the staffing considerations loom large in the 2025-26 budget, ITD lists several promising priorities for the near term that industry should be aware of. They include:

• The replacement of the outdated Citywide Document Management System with a cloud-based document management solution. That new system must integrate with the existing enterprise business system.
• The replacement and migration of the outdated Police Department Human Resources Information System with the city’s Finance and Human Resources System.
• The creation of a “comprehensive and actionable” disaster recovery road map, including recovery strategies, communication processes, and business-resumption plans.
• The modernization of IT job classifications and the department’s organizational structure.
• The implementation of Customer 360 into the city’s 311 operations. That platform streamlines business processes and integrates data across various systems, while also giving citizens insight into the request life cycle.
• Expansion of the Customer Relationship Management system and use of AI-based systems to reduce 311 call wait times. This expansion will also include other departments to increase efficiency.
• The implementation of a cloud-based code enforcement case management system.
• The implementation of a Unified Endpoint Management solution.

During a Budget and Audit Committee meeting April 22, Chief Financial Officer Peter Coletto said the city is closely monitoring what he called an “atmosphere of economic uncertainty” surrounding federal funding, the ongoing tariff situation and the status of unfunded liability.

“It’s a fluid situation; it’s very uncertain,” Coletto said.

The process is far from complete. Coletto told committee members that a budget overview will be presented May 13, followed by deliberation and discussion sessions May 20 and June 3, respectively. The finalized budget is expected to be approved by the council June 10.

Officials with ITD could not be reached for comment before press time Tuesday afternoon.