Long Beach officials are sounding the alarm over a projected $60 million to $80 million budget shortfall in fiscal year 2027, warning that the city could be headed for some tough choices if revenues do not recover. The warning followed a year-end budget review that showed the city ran over its plan and has already started dipping into one-time reserves, a move that leaves less wiggle room and puts departments on notice to tighten up their spending.
Where the Money Math Gets Ugly
The latest year-end review shows Long Beach wrapped up FY25 about $40 million over budget and drew roughly $20 million from pandemic-era reserves, leaving about $68 million spread across several funds and turning an earlier $39.3 million estimate into a $60 to $80 million forecast for FY27, as reported by the Long Beach Post. The city’s adopted FY26 budget is about $3.7 billion overall, with roughly $750 million in the unrestricted general fund, according to the City of Long Beach.
City Manager Wants Savings Now, Not Later
City Manager Tom Modica told council members he does not anticipate major service cuts or layoffs in 2025 or 2026, but he warned that deeper reductions are likely in 2027 if the revenue picture does not improve. Modica has instructed departments to hunt for savings by postponing nonessential spending, delaying hires where possible and protecting core public safety and legally mandated services. Staff have already identified some near-term savings to ease the immediate strain while the council and city management map out longer-term options.
Health Department On The Hot Seat
Officials flagged the Health Department as especially exposed. Its budget is about $254 million, and it finished FY25 roughly $14 million in the red. On top of that, the city learned last week it will lose a $9 million federal health infrastructure grant, all while facing a roughly $26 million shortfall in tax revenues. To help close the gap, the city has set a departmental savings target that is supposed to generate roughly $22 million if teams can cut about 3 percent, after earlier efforts produced about $7 million in savings, as reported by the Long Beach Post. The mix of lost grants, sluggish tax receipts and growing personnel and liability costs is what pushed the projection higher.
Where Cuts Are Likely To Land
Because much of Long Beach’s $3.7 billion budget is locked into specific uses, the pressure will fall on the roughly $750 million general fund that covers day-to-day city services. The city has limited room to hike local taxes under state rules, and many of the one-time budget cushions used in recent years are now exhausted, according to city budget documents. That leaves a familiar playbook that could include delaying capital projects, scaling back discretionary community programs, trimming one-time investments and tightening hiring and vacancy policies, per the City of Long Beach.
What Residents Can Expect Next
Councilmember Cindy Allen has requested a public presentation so residents can clearly see the tradeoffs on the table, and the council is expected to schedule hearings and workshops in the coming months to review proposed cuts and possible alternatives. For now, city leaders say their focus is on short-term caution while staff and elected officials build a more detailed menu of options ahead of next year’s budget decisions.
