Lodi City Budget: Fiscal Challenges

… and Structural Deficits

The City of Lodi, California, faces significant fiscal challenges as it implements budget cuts and cost-saving measures to address mounting financial pressures. Despite approving a $291 million balanced budget for fiscal year 2025-2026, the city faces a projected $4.8 million structural deficit that is expected to emerge over the next five years. [1] City officials have implemented targeted reductions totaling approximately $1 million in departmental cuts while prioritizing the maintenance of core services over expansion[1]. The budget situation has been further complicated by management controversies involving allegations of financial mismanagement and transparency issues, creating additional uncertainty during critical budget deliberations[3].

Current Budget Situation and Structural Challenges

2025-2026 Budget Overview

The Lodi City Council approved a $291 million citywide spending plan for fiscal year 2025-2026, representing an 8.35% increase over the previous year's budget[4]. This increase was primarily driven by escalating personnel expenses and rising costs for supplies and materials[4]. Despite economic headwinds, General Fund revenues are projected to increase by a modest 4.1%, enabling the city to maintain essential services while addressing strategic community outcomes [13].

The budget increase comes from several revenue sources, including recently approved rate hikes for Parks, Recreation, and Cultural Services facilities, an anticipated $560,000 in annual rental income from a new power plant located on the southwest side of Lodi Lake, and $1.7 million in interest income[4]. Acting City Manager James Lindsay emphasized that operating within a constrained fiscal environment, particularly concerning the General Fund, necessitated careful consideration and strategic decisions to maintain essential services[4].

Structural Deficit Projections

Despite the balanced nature of the current budget, Lodi faces significant long-term fiscal challenges. City officials unveiled projections showing a $4.8 million structural deficit emerging over the next five years[1]. Earlier projections were even more concerning, with a consultant forecasting at least nine years of million-dollar budget deficits starting in fiscal year 2026, potentially reaching a deficit of $2.6 million by 2034[2]. The city is currently facing a $1.6 million deficit in its upcoming budget deliberations, necessitating ongoing adjustments and cost-saving measures. [17]

The structural nature of these deficits indicates that the city's ongoing expenses are growing faster than its revenue streams, creating sustainability challenges that will require continued attention from city leadership. These projections have prompted city officials to prioritize service maintenance over enhancement, acknowledging that "overall resources are limited. "[1]

Specific Budget Cuts and Cost-Saving Measures

Major Budget Reductions

City officials have implemented several significant cost-saving measures to address the fiscal challenges. The most substantial cut involved eliminating a proposed $2 million Facility Internal Service Fund, which had been intended to support future building maintenance[1]. This represents one of the largest single budget reductions in the current fiscal plan, though $500,000 was subsequently allocated to the General Fund for facility maintenance needs[13].

The budget also eliminates $154,000 in part-time police staffing, specifically removing a proposed increase in the part-time budget for pay raises for retired annuitants in the Lodi Police Department[1]. This reduction affects the department's capacity to utilize retired officers in part-time roles, potentially impacting operational flexibility.

Additional cost-saving measures include reducing department budget requests by approximately $952,000 across various city departments[4]. These reductions represent targeted cuts designed to minimize impact on core services while addressing the city's fiscal constraints.

Service Maintenance Over Expansion

The budget strategy explicitly prioritizes service maintenance over enhancement, reflecting the constrained fiscal environment[1]. This approach means that while existing services will continue, new programs or service expansions are largely deferred until the city's financial position improves. The strategy impacts Measure L funding, a half-cent sales tax approved by voters in 2020, which contributes approximately $10 million annually to the General Fund. [1]

Budget Manager Jennelle Baker noted that the plan utilizes targeted reductions and adjustments to close the gap for the upcoming year while maintaining current staffing levels. [1] This approach avoids cuts to full-time positions, maintaining employment stability while reducing operational expenses through other means.

Management Controversies and Governance Issues

City Manager Allegations and Administrative Leave

The budget process has been overshadowed by significant management controversies involving City Manager Scott Carney. In April 2025, Carney was placed on administrative leave following an employee evaluation, though the exact reasons remain undisclosed[17]. During a city council meeting in early April, Carney made shocking allegations about financial mismanagement within the city administration[3].

Carney claimed that staff reports were edited and parts were redacted contrary to his direction, with the edited reports allegedly redacting "public disclosures related to overspending the city's limited General fund internal control deficiencies and material findings from the annual audit"[3]. He further alleged that internal reviews revealed "evidence of widespread misuse of public funds and use of City credit cards to purchase personal items"[3].

Whistleblower Claims and Legal Implications

During budget deliberations in May 2025, the city council was notified in closed session of an April 12 letter sent by Carney's attorney, claiming he was a whistleblower and warning of potential retaliation[14]. This development added another layer of complexity to the budget process, as the allegations raised questions about the integrity of financial reporting and internal controls.

Mayor Cameron Bregman acknowledged the investigation, stating that "this investigation is for us all. It's for me, the people of Lodi, the employees of Lodi"[17]. The mayor indicated that more information would be revealed at future meetings while emphasizing the city's support for audits of the finance department[3].

Impact on City Services and Departments

Public Safety Prioritization

Despite budget constraints, city officials have maintained their commitment to public safety as the top priority. Councilmember Lisa Craig-Hensley emphasized that "Public safety is still the top priority," even amid fiscal challenges[1]. The police department accounts for 37% of the General Fund budget, while the fire department comprises nearly 22%[1].

However, budget constraints have affected the expansion plans of public safety departments. The city is not adding new police positions and instead focuses on fully staffing the department to its allocated 80 uniformed personnel [17]. For the fire department, the proposed budget provides no room for new services, although existing operations remain funded [17].

The city has made strategic investments in public safety technology, including approval of $170,000 for eight additional Flock cameras and gunshot-detection software to combat crime[5]. Advanced Life Support paramedic services have also been implemented through incentive programs[5].

Parks and Recreation Services

Parks and recreational services, which make up about 10% of the General Fund budget, have seen mixed impacts from budget cuts[1]. While the city has continued to invest in park infrastructure, including $1.6 million for park play structure replacements and the completion of the $3 million Lodi Lake renovation[7], some projects have been affected by budget constraints.

The challenge of funding projects like Salas Park lighting has forced difficult choices to ensure youth safety during night ball games[7]. Despite these challenges, the city allocated $300,000 for alley replacements on the East Side and continued to prioritize park improvements through reserve funding. [5]

Infrastructure and Capital Projects

The budget includes $16.9 million allocated for essential infrastructure projects, including water main rehabilitation, traffic signal improvements at Ham Lane and Turner Road, security cameras in city parks, Ham Lane widening, and transit facility repairs and upgrades[4]. These investments represent ongoing commitments to maintaining and improving the city's infrastructure despite fiscal pressures.

However, two major projects that the city had been planning for two years have been placed on indefinite hold due to budget constraints[6]. The budget also involves significant reductions in new capital project appropriations compared to previous years[7]. Unfortunately, the specific names and details of the two major projects placed on indefinite hold have not been publicly disclosed in available city documents or media reports. The city has confirmed that these were projects that had been in the planning stages for approximately two years before being suspended due to budget constraints

Future Fiscal Outlook and Projections

Long-term Financial Challenges

The city faces continued fiscal challenges beyond the current budget cycle. If current trends continue, Lodi could see a deficit exceeding $4.2 million over a five-year span[17]. Councilmember Craig-Hensley acknowledged that while the city can "get through the mid-year adjustment and make some corrections, over the long term, the next five years, we will have to look at new revenues or budget savings"[17].

The structural nature of the deficit suggests that the city will need to pursue either revenue enhancement strategies or additional cost reductions to achieve long-term sustainability. The reliance on reserves to bridge current gaps is not sustainable in the long term, necessitating more fundamental adjustments to the city's fiscal structure.

Reserve Management and Sustainability

The city's reserves continue to support key priorities, such as park improvements, information technology upgrades, and vehicle and equipment replacements [13]. The budget allocates $2.23 million from existing reserves to address compensation, general liability, and property coverage[4]. However, this strategy of using reserves to maintain current service levels while addressing cost increases creates pressure for future budget cycles.

Acting City Manager James Lindsay noted that the city enacted "a series of reductions totaling $7 million to reconcile revenue forecasts with expenditures"[4]. This approach reflects the ongoing challenge of aligning resources with service delivery expectations while maintaining fiscal responsibility.

Summary

Lodi's budget cuts reflect a city grappling with the complex challenge of maintaining essential services while addressing structural fiscal imbalances. The implementation of targeted reductions, including the elimination of the $2 million Facility Internal Service Fund and cuts to part-time police staffing, demonstrates the difficult choices facing city leaders[1]. While the city has successfully balanced its current budget and avoided cuts to full-time positions, the projected $4.8 million structural deficit over five years indicates that more significant adjustments may be necessary[1].

The management controversies surrounding allegations of financial mismanagement have added uncertainty to the budget process, highlighting the importance of transparency and strong internal controls in municipal finance[3]. Moving forward, the city will need to balance its commitment to public safety and core services with the reality of constrained resources, potentially requiring new revenue strategies or more substantial service reductions to achieve long-term fiscal sustainability. The emphasis on maintaining reserves and prioritizing infrastructure investments demonstrates prudent financial management, but the underlying structural challenges will require continued attention and strategic planning to ensure the city's fiscal health in the years ahead.

Sources

[1] Lodi's proposed budget highlights $4.8M structural gap - Stocktonia https://stocktonia.org/news/local-government/2025/05/29/lodis-proposed-budget-highlights-4-8m-structural-gap/

[2] Consultant forecasts years of Lodi budget deficits - ABC10 https://www.abc10.com/article/news/local/lodi/budget-deficit-lodi/103-3e843ee6-2248-4fdb-83c7-501c1d324fd8

[3] Lodi city manager raises concerns about misuse of funds - YouTube https://www.youtube.com/watch?v=mhgLSrLHU9k

[4] Lodi's budget up 8.35% on rising costs - Yahoo https://www.yahoo.com/news/lodis-budget-8-35-rising-195200213.html

[5] Lodi City Council - Looking back over 2024... https://lodi411.com/lodi-eye/lodi-city-council-looking-back-over-2024

[6] Lodi Makes Cuts to Balance Budget, Deficits Loom - Ground News https://ground.news/article/lodis-proposed-budget-highlights-48m-structural-gap

[7] City Council Approves 2024-2025 Annual Budget - Lodi.gov https://www.lodi.gov/CivicAlerts.asp?AID=397&ARC=610

[8] San Joaquin County nonprofits get their funding cut from state ... https://www.cbsnews.com/sacramento/news/san-joaquin-county-nonprofits-get-their-funding-cut-from-state-and-national-level/

[9] City Council Approves 2024-2025 Annual Budget - Lodi.gov https://www.lodi.gov/CivicAlerts.asp?AID=397&ARC=609

[10] City of Lodi Government Overview - California Local https://californialocal.com/localnews/san-joaquin/ca/government/show/200-city-of-lodi/overview/

[11] [PDF] ANNUAL BUDGET - IIS Windows Server https://cms3.revize.com/revize/stockton/Documents/Government/Budget%20And%20Financial%20Reports/2021-22_Adopted_Annual_Budget_Book.pdf

[12] [PDF] Minutes - Lodi Public Library Board of Trustees https://www.lodi.gov/AgendaCenter/ViewFile/Minutes/_04142025-1809

[13] [PDF] City of Lodi Adopts FY 2025-2026 Balanced Budget https://www.lodi.gov/DocumentCenter/View/8709/FINAL-Adopted-Budget-FY-25_26-Press-Release_June-6-2025

[14] Lodi leaders receive letter from city manager amid budget talks https://www.cbsnews.com/sacramento/video/lodi-leaders-receive-letter-from-city-manager-amid-budget-talks/

[15] News Flash • Lodi, CA • CivicEngage https://www.lodi.gov/CivicAlerts.aspx

[16] San Joaquin County Releases 2025-2026 Proposed Budget https://www.sjgov.org/press-releases/press-release-detail/2025/06/04/sjc-releases-2025-26-proposed-budget

[17] Lodi faces budget deficit as city hears from city manager for first time ... https://www.cbsnews.com/sacramento/news/lodi-city-balancing-budget-city-manager-letter/

[18] Medi-Cal, Medicaid changes — A Medical Emergency for Lodi? https://lodi411.com/lodi-eye/medi-cal-medicaid-changes-a-medical-emergency-for-lodi

[19] Lodi city council discusses its budget for the next fiscal year - YouTube https://www.youtube.com/watch?v=BUd95_I3iWo

[20] San Joaquin County Releases 2024-2025 Proposed Budget ... https://www.sjgov.org/press-releases/press-release-detail/2024/06/05/sjc-releases-2024-2025-proposed-budget-structurally-balanced-budget

[21] Lodi City Council budget shift gives nonprofits a boost - Yahoo https://www.yahoo.com/news/lodi-city-council-budget-shift-035900948.html

[22] Lodi city council discusses its budget for the next fiscal year - Yahoo https://www.yahoo.com/news/lodi-city-council-discusses-budget-050512617.html

[23] Lodi makes cuts to balance budget, deficits loom - Yahoo https://www.yahoo.com/news/lodi-makes-cuts-balance-budget-035900296.html

[24] San Joaquin County to pass budget without using reserves - Yahoo https://www.yahoo.com/news/san-joaquin-county-pass-budget-035900606.html

[25] Lodi considers changes to how the public library operates - Yahoo https://www.yahoo.com/news/lodi-considers-changes-public-library-065112292.html

[26] News Flash • City of Lodi Adopts FY 2025-2026 Balanced Budge https://www.lodi.gov/CivicAlerts.asp?AID=395&ARC=636

[27] News Release: City of Lodi Adopts FY 2025-2026 Balanced Budget ... https://www.instagram.com/p/DKkbNwlMbt8/

[28] Recorder - San Joaquin County https://www.sjgov.org/department/assessor/recorder-county-clerk-information/recorder

[29] City Council Approves 2024-2025 Annual Budget - Lodi.gov https://www.lodi.gov/CivicAlerts.asp?AID=397&ARC=619

[30] [PDF] An Introduction to the City's Budget - City of Lodi https://www.lodi.gov/DocumentCenter/View/2033

[31] Internal Service Funds (ISFs) - Department of Finance - CA.gov https://dof.ca.gov/accounting/accounting-statewide-cost-allocation/internal-service-funds-isfs/

[32] [PDF] City of Lodi 2025 Draft Budget Lodi Utilities - Wastewater Cash Flow http://www.cityoflodi.us/AgendaCenter/ViewFile/Item/18249?fileID=14046

[33] BTBL Federal Funding Loss Announcement - California State Library https://www.library.ca.gov/btbl/federal-funding-loss/

[34] San Joaquin County Requests Nearly $27 million in Funding from ... https://www.sjgov.org/press-releases/press-release-detail/2025/04/18/sjc-requests-27-million-in-funding-fed-lawmakers

[35] [PDF] Report on Library Strategic Plan - City of Lodi https://www.lodi.gov/AgendaCenter/ViewFile/Minutes/_02102025-1778